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THE 


or  ft 


LINon 


13)4 


WISCONSIN  INCOME  TAX  LAW 


WITH  EXPLANATORY  NOTES 


SECOND  EDITION 


issued  by 

WISCONSIN  TAX  COMMISSION 

Madison,  Wis. 


December,  1913. 


MADISON,  WIS. 

Democrat  Printing  Company,  State  Printer 
1913 


^ U IvV- 


\^\2> 


SUMMARY  OF  CONTENTS 


THE  INCOME  TAX  LAW 
Part  I. 

The  Income  Tax. 

I.  Explanatory  provisions Page 

II.  Deductions  allowed  corporations 13 

III.  Deductions  allowed  individuals 17 

IV.  Exemptions  20 

V.  Rates  22 

PART  II. 

Administration. 

VI.  Districts  and  assessors 26 

VII.  Assessments  and  returns 29 

VIII.  Appeal  and  review 34 

IX.  Apportionment  and  collection 37 

X.  Secrecy  of  Returns — County  Supervisors  of  Assessment — 

Personal  property  offset — Powers  of  Tax  Commission...  43 

PART  III. 

Duties  of  Assessors  of  Incomes  in  Connection  with  General  Prop- 
erty Taxation  45 

Instructions  to  Individuals 47 

Instructions  to  Corporations “ 50 

Instructions  to  Guardians ™ 


PREFACE 


This  edition  of  the  Wisconsin  income  tax  law  is  designed  to 
assist  taxpayers  in  an  understanding  of  the  law.  Abstruse  legal 
discussions  have  consequently  been  avoided.  Taxpayers  desir- 
ing information  about  the  meaning  of  the  law  or  the  proper 
method  of  reporting  are  advised  to  apply  to  the  Tax  Commission 
or  the  nearest  assessor  of  incomes.  In  the  great  majority  of. 
cases,  it  is  unnecessary  to  consult  lawyers  or  notaries,  as  it  is 
the  desire  of  those  administering  the  law  to  protect  the  interests 
of  taxpayers  as  well  as  those  of  the  public. 

Prior  to  the  enactment  of  the  income  tax  law  the  following 
property  was  subject  to  assessment  as  personal  property:  (a) 
moneys  and  credits;  (b)  stocks  and  bonds  not  otherwise  spec- 
ially provided  for;  (c)  personal  ornaments  and  jewelry  habit- 
ually worn;  (d)  household  furnishings;  (e)  machinery,  imple- 
ments and  tools  used  in  farm,  orchard  or  garden;  (f)  one  watch 
carried  by  the  owner.  By  the  provisions  of  the  income  tax  law 
this  property  was  exempted,  hence  the  income  tax  is  a substitute 
for  the  personal  property  tax  formerly  levied  on  such  property. 
This  substitution  feature  is  further  carried  out  by  the  property 
tax  offset  described  on  page  42. 

Attention  is  particularly  directed  to  changes  in  the  income  tax 
law  made  at  the  legislative  session  of  1913,  and  discussed  on  the 
pages  here  indicated  r 

Profits  derived  from  the  sale  of  real  estate  or  other  capital 

assets  held  for  more  than  three  years Page  9 

Income  from  rentals  and  royalties  from  property  without 

the  state  Pages  10  and  11 

Depreciation  and  exhaustion  of  mines Pages  13,  14,  17 

Limitation  of  interest  deductible*  by  corporations Pages  13  and  14 


Tax  on  bondholders  of  corporations Page  14 

Exemption  of  banks  from  operation  of  Income  Tax  Law Page  14 


Exemption  of  dividends  from  banks  and  trust  com- 
panies   Pages  16  and  19 

Tax  on  bank  stock  not  to  be  used  as  an  offset  to  income 

tax  Pages  16  and  42 

Exemption  of  $200  for  actual  as  contrasted  with  legal  de- 
pendents   Page  20 

Change  in  rate  of  taxation  applicable  to  corporations..  Pages  23  to  25 


6 The  Wisconsin  Income  Tax  Law. 

By  chapter  554,  laws  of  1913,  subdivisions  1087m — 3 (f)  and 
1087m — 4 (e)  and  (f)  of  the  original  income  tax  law,  exempting 
salaries  received  by  officials  of  the  United  States  and  int- 
erest received  from  United  States  bonds  and  other  securities 
exempt  from  taxation  under  the  laws  of  the  United  States,  have 
been  repealed.  In  accordance  with  the  apparent  legislative  in- 
tent evidenced  by  the  repeal  of  these  exemptions,  such  income 
will  be  assessed  and  taxed  unless  the  courts  decide  otherwise. 


THE  WISCONSIN  INCOME  TAX  LAW 


With  Explanatory  Notes 


PART  I. 


This  law  was  originally  enacted  as  Chapter  658,  Laws  of  1911. 
It  has  been  amended  by  Chapters  27,  443,  487,  554,  615  and  720, 
Laws  of  1913.  The  text  of  the  law  now  reads  as  follows : 


I. 


For  what  period  tax  levied. 

Section  1087m — 1.  There  shall  be  assessed,  levied,  collected 
and  paid  a tax  upon  incomes  received  during  the  year  ending 
December  31,  1911,  and  upon  incomes  received  annually  there- 
after, by  such  persons  and  from  such  sources  as  hereinafter  de- 
scribed ; provided,  that  firms,  copartnerships,  corporations,  joint 
stock  companies  and  associations  which  customarily  close  their 
annual  accounts  on  a date  other  than  December  31,  or  which 
customarily  estimate  their  income  or  profits  on  a basis  other  than 
of  actual  cash  receipts  and  disbursements,  may,  with  the  consent 
and  approval  of  the  tax  commission,  return  for  assessment  and 
taxation  the  income  or  profits  earned  during  the  business  year 
for  which  the  accounts  of  such  person  are  customarily  made  up. 

The  first  assessment  under  this  law  was  made  in  1912  on  the 
income  received  in  1911.  The  tax  was  collected  by  local  treas- 
urers at  the  time  other  taxes  were  collected — in  December,  1912, 
and  January,  1913. 

In  general  returns  should  be  made  for  the  calendar  year. 
Where  this  would  cause  particular  hardship,  authority  may  be 
secured  from  the  tax  commission  to  make  a return  for  the  busi- 
ness year.  In  its  principal  results  and  conclusions,  (though  not 
in  form),  the  return  should  correspond  substantially  with  the 


. ■ 

8 The  Wisconsin  Income  Tax  Law. 

report  made  to  the  federal  government.  Lack  of  correspon- 
dence may  cause  investigation  that  would  otherwise  be  unneces- 
sary. 

The  federal  income  tax  law  of  1913  in  paragraph  (d)  of  sub- 
section G,  provides  that 

“the  proper  officers  of  any  state  imposing  a general  income 
tax,  may,  upon  the  request  of  the  governor  thereof,  have  access 
to  said  (federal  corporation  income)  returns  or  to  an  abstract 
thereof,  showing  the  name  and  income  of  each  such  corporation, 
joint  stock  company,  association  or  insurance  company,  at  such 
times  and  in  such  a manner  as  the  Secretary  of  the  Treasury  may 
prescribe.” 

Definition  of  “person”. 

Section  1087m — 2.  1.  The  term  “person,”  as  used  in  this 

act,  shall  mean  and  include  any  individual,  firm,  copartnership, 
and  every  corporation,  joint  stock  company  or  association  organ- 
ized for  profit,  and  having  a capital  stock  represented  by  shares, 
unless  otherwise  expressly  stated. 

For  the  sake  of  brevity  and  convenience  it  has  been  thought 
best  to  use  the  word  “individuals”  where  natural  persons  are 
referred  to  and  the  word  “corporations”  as  the  equivalent  of 
“corporation,  joint  stock  company  or  association  organized  for 
profit.” 

What  income  includes. 

Section  1087m — 2.  2.  The  term  “income,”  as  used  in  this 

act,  shall  include : 

(a)  All  rent  of  real  estate,  including  the  estimated  rental  of 
residence  property  occupied  by  the  owner  thereof. 

(b)  All  dividends  derived  from  stocks  and  all  interest  derived 
from  money  loaned  or  invested  in  notes,  mortgages,  bonds  or 
other  evidence  of  debt  of  any  kind  whatsoever. 

(c)  All  wages,  salaries  or  fees  derived  from  services;  pro- 
vided, that  compensation  to  public  officers  for  public  service 
shall  not  be  computed  as  a part  of  the  taxable  income  in  such 
cases  where  the  taxation  thereof  would  be  repugnant  to  the  con- 
stitution. 

(d)  All  profits  derived  from  the  transaction  of  business  or 
from  the  sale  of  real  estate  or  other  capital  assets ; provided,  that 
of  the  profits  derived  from  the  sale  of  real  estate  or  other  capital 
assets  acquired  previous  to  January  1,  1911,  only  such  propor- 
tion shall  be  taxable  as  the  time  between  January  1,  1911,  and 
the  date  of  sale  bears  to  the  entire  time  between  the  date  of 
acquisition  and  the  date  of  sale. 


The  Wisconsin  Income  Tax  Law.  9 

(e)  All  royalties  derived  from  mines  or  the  possession  or  use 
of  franchises  or  legalized  privileges  of  any  kind. 

(f)  And  all  other  gains,  profits  or  income  of  any  kind  derived 
from  any  source  whatever  except  such  as  hereinafter  exempted. 
(1913  c.  720). 

The  income  here  defined  is  gross  income ; the  taxable  net  in- 
come is  to  be  computed  by  subtracting  the  deductions  and  ex- 
emptions described  on  pages  13  to  21. 

(a)  The  deductions  for  repairs,  insurance,  depreciation  and 
taxes  “on  residence  property  occupied  by  the  owner  thereof” 
should  not  ordinarily  exceed  50%  of  the  gross  estimated  rental 
value  of  such  property  and  in  no  case  more  than  the  entire  esti- 
mated rental.  Greater  deductions  than  the  50%  referred  to  will 
be  allowed  only  in  exceptional  cases.  Frequently  the  most  ac- 
curate way  of  estimating  the  net  rental  value  of  such  property 
is  to  inquire  what  rent  could  be  secured  from  a tenant  or  lessee 
who  assumed  all  expenses  except  interest  on  debt.  The  deduc- 
tion for  insurance  should  cover  the  cost  of  insurance  for  one 
year. 

(b)  Dividends  and  interest  are  taxed  at  the  residence  of  the 
recipient  just  as  stock  and  bonds  were  taxed  when  subject  to  the 
property  tax. 

(c)  While  there  are  precedents  holding  salaries  of  public  offi- 
cers and  especially  judicial  officers  under  the  civil  war  income 
tax  act  exempt  from  taxation  on  constitutional  grounds,  the  rea- 
soning upon  which  such  rulings  are  based  is  highly  technical 
and  it  is  not  believed  that  it  applies  to  the  Wisconsin  law.  It 
is  not  apparent  why  public  officers  should  not  contribute  to  the 
support  of  government  like  other  citizens  so  long  as  they  are  not 
singled  out  for  discrimination.  The  tax  commission  has  accord- 
ingly ruled  that  salaries  of  public  officers  should  be  returned  for 
taxation  and  assessed  as  income  until  the  courts  decide  other- 
wise. 

(d)  The  “three  year  rule”  previously  applicable  to  profits 

derived  from  the  sale  of  real  estate  and  capital  assets  has  been 
repealed  and  replaced  by  the  prorating  process  provided  in  sec- 
tion 1087m — 2.  2.  (d).  Note  that  this  process  or  rule  refers 

only  to  durable  properties  not  customarily  held  for  sale,  such  as 
land  and  buildings  and  has  no  reference  to  profits  derived  from 
the  sale  of  ordinary  stock  in  trade.  Keal  estate  companies 
which  treat  their  holdings  as  merchants  do  their  stock  of  goods 


10 


• The  Wisconsin  Income  Tax  Law. 


are  an  exception  to  the  general  provisions  of  this  paragraph  of 
the  law. 

Under  the  present  law  if  property  were  purchased  in  July 
1906  and  sold  at  a profit  of  $5,000  in  January  1914,  the  amount 
taxable  would  be.  determined  upon  as  follows : 

July  1906  to  January  1911  = 4%  years 
January  1911  to  January  1914  = 3 years 

3/7%  = 2-5  Two-fifths  of  $5,000  = $2,000 

The  profit  taxable  on  such  a sale  would  accordingly  be  $2,000. 

Income  of  residents  and  nonresidents. 

Section  1087m — 2 3.  The  tax  shall  be  assessed,  levied  and 
collected  upon  all  income,  not  hereinafter  exempted,  received 
by  every  person  residing  within  the  state,  and  by  every  nonresi- 
dent of  the  state,  upon  such  income  as  is  derived  from  property 
located  or  business  transacted  within  the  state.  In  determining 
taxable  income,  rentals,  royalties,  and  gains  or  profit  from  the 
operation  of  any  farm,  mine,  or  quarry  shall  follow  the  situs  of 
the  property  from  which  derived,  and  income  from  personal  ser- 
vice and  from  land  contracts,  mortgages,  stocks,  bonds  and  se- 
curities shall  follow  the  residence  of  the  recipient.  With  re- 
spect to  other  income,  persons  engaged  in  business  within  and 
without  the  state  shall  be  taxed  only  upon  such  income  as*  is 
derived  from  business  transacted  and  property  located  within 
the  state,  which  may  be  determined  by  an  allocation  and  sepa- 
rate accounting  for  such  income  when  made  in  form  and  man- 
ner prescribed  by  the  tax  commission,  but  otherwise  shall  be  de- 
termined in  the  manner  specified  in  subdivision  (e)  of  subsec- 
tion 7 of  section  1770b  of  the  statutes,  as  far  as  applicable. 
(1913  c.  720). 

The  preceding  subsection  divides"  income  into  three  classes : 
(a)  income  which  follows  the  situs  of  the  property,  (b)  income 
which  follows  the  residence  of  the  recipient,  (c)  apportionable 
income,  f Thus  a resident  of  Wisconsin  is  not  taxable  on  rent 
received  from  property  in  Michigan  or  profits  derived  from'  the 
operation  of  a mine  or  farm  in  Minnesota;  whereas  a resident 
of  Illinois  is  .taxable  on  rent  or  profits  derived  from  property  in 
Wisconsin.  ] On  the  other  hand,  dividends  received  from  corpo- 
rations, profits  from  copartnerships  and  interest  from  land 
contracts,  mortgages,  bonds  and  securities  follow  the  residence 
of  the  recipient.  ^ Interest  received  by  nonresidents  from  mort- 
gages secured  by  property  in  Wisconsin  is  not  subject  to  the 
tax.  Interest  and  discounts,  however,  received  by  foreign 
business  concerns  incident  to  their  Wisconsin  business — e.  g., 


The  Wisconsin  Income  Tax  Law.  11 

from  bank  deposits,  bills  and  accounts  receivable,  etc. — do  not 
necessarily  follow  the  legal  domicile  of  the  company,  but  should 
be  treated  as  “apportionable”  income,  as  explained  below. 

In  dealing  with  income  which  neither  follows  the  situs  of  the 
property  nor  the  residence  of  the  recipient,  two  processes  are 
authorized  by  law:  a separate  accounting  or  an  apportionment. 
Mercantile  concerns  and  a few  other  classes  with  which  special 
arrangements  have  been  made  in  the  past,  will  be  expected  to 
make  the  separate  accounting;  but  other  corporations  desirous 
of  making  a separate  or  allocated  return  for  Wisconsin  business 
only,  must  apply  to  the  tax  commission  in  advance,  stating 
clearly  the  reasons  why  a separate  accounting  is  preferable. 
The  apportionment  process  specified  in  subdivision  (e)  of  sub- 
section (f)  of  section  1770b  of  the  statutes  constitutes  the  gen- 
eral rule.  It  is  as  follows: 

“In  determining  the  proportion  of  capital  stock  employed 
in  the  state,  the  same  shall  be  computed  by  taking  the  gross  busi- 
ness in  dollars  of  the  corporation  in  the  state  and  add[ing]  the 
same  to  the  full  value  in  dollars  of  the  property  of  the  corpora- 
tion located  in  the  state.  The  sum  so  obtained  shall  be  the  nu- 
merator of  a fraction  of  which  the  denominator  shall  consist  of 
the  total  gross  business  in  dollars  of  the  corporation,  both  within 
and  ^without  the  state,  added  to  the  full  value  in  dollars  of  the 
entire  property  of  the  corporation,  both  within  and  without  the 
state.  The  fraction  so  obtained  shall  represent  the  proportion 
of  the  capital  stock  represented  within  the  state.” 

This  rule  is  to  be  followed  “only  as  far  as  applicable.”  Con- 
sidering that  it  was  originally  devised  for  another  purpose  and 
that  important  classes  of  income  are  not  subject  to  this  rule,  it 
is  believed  that  “property”  as  used  in  the  apportionment  frac- 
tion means  property  from  which  apportionable  income  is  de- 
rived, i.  e.,  the  full  or  book  value  of  property  other  than  or  ex- 
cluding farms,  mines,  quarries  and  property  yielding  rents  and 
royalties  (the  income  from  which  follows  the  situs  of  the  prop- 
erty), and  land  contracts,  mortgages,  stocks,  bonds  and  securi- 
ties (the  income  from  which  follows  the  residence  of  the  reci- 
pient) . 

‘ 1 Gross  business  ’ ’ it  will  be  noted  also  consists  of  at  least  two 
elements : the  business  of  production  and  that  of  distribution  or 
sale.  The  former  is  measured  by  costs  of  production,  the  latter 
by  gross  sales  minus,  costs  of  production.  Thus,  if  an  Illinois 
corporation  manufactures  products  in  Wisconsin  costing  $600,- 


12 


The  Wisconsin  Income  Tax  Law. 

000  and  sells  these  products  in  Illinois  for  $1,000,000,  the  gross 
business  within  Wisconsin  is  $600,000  and  that  without  the  state 
is  $400,000.  The  operation  of  the  apportionment  process  may 
be  illustrated  as  follows : 

Company  A.  incorporated  in  Illinois  earns  net  income  of 
$90,000,  of  which  $6,000  is  derived  from  a mine  in  Michigan, 
$4,000  from  bonds  and  $80,000  from  a manufacturing  business 
of  which  the  factory  is  in  Wisconsin  and  the  sales  department 
in  Chicago.  It  is  further  assumed  that  the  gross  sales  are 
$1,000,000,  the  manufacturing  costs  $600,000,  the  full  value  of 
the  mine  $50,000,  the  full  value  of  the  bonds  $70,000,  and  the 
value  of  other  property  $900,000,  of  which  the  Wisconsin  plant 
represents  $500,000. 


Full  value  of  property 

Within  the 
State. 

..  $500,000 

Within  & Without 
the  State. 
$900,000 

Gross  business  of  production  . . 600,000 

600,000 

Gross’  business  of  distribution 
sale  

or 

0 

400,000 

Total  

. .$1,100,000 

$1,900,000 

1,100,000 

= 57.9% 

1,900,000 

Total  net  income 

. . $90,000 

Nonapportionable  income 

(in 

this  case  exempt)  

10,000 

Apportionable  income  

Per  cent  to  Wisconsin 

. . $80,000 
57.9 

Taxable  income  

. . $46,320 

Tax  

2,319.20 

The  Wisconsin  Income  Tax  Law. 


13 


II. 


DEDUCTIONS  ALLOWED  CORPORATIONS. 

Section  1087m — 3.  Every  corporation,  joint  stock  company 
or  association  shall  be  allowed  to  make  from  its  gross  income  the 
following  deductions : 

Wages  and  salaries. 

(a)  Payments  made  within  the  year  for  wages  of  employees 
and  salaries  of  officers  if  reasonable  in  amount,  for  services  act-  ■ 
ually  rendered  producing  such  income;  provided,  there  be  re- 
ported the  name,  address  and  amount  paid  each  such  employee 
or  officer  residing  within  this  state  to  whom  a compensation  of 
seven  hundred  dollars  or  more  shall  have  been  paid  during  the 
assessment  year.  (1913  c.  720.) 

» Under  this  provision  the  commission  is  vested  with  the  right  to 
disallow  a claim  for  deduction  because  of  salaries  paid,  if  it  shall 
be  determined  either  that  the  salaries  under  consideration  were 
excessive,  or  were  not  paid  for  services  actually  rendered  in  the 
production  of  the  income,  or  that  the  corporation  has  failed  to 
give  the  name  of  the  persons  in  Wisconsin  actually  receiving 
compensation  of  $700  or  more  for  the  year. 

In  accordance  with  section  1087m — 10  and  section  1087m — 28, 
every  corporation,  whether  liable  to  pay  an  income  tax  or  not, 
should  furnish  a list  of  its  employees  and  officers*  residing  in 
Wisconsin,  together  with  a statement  of  the  wages*  and  salaries 
paid  to  them  if  in  excess  of  $700. 

Expenses;  Depreciation;  Interest. 

Section  1087m — 3.  (b)  Other  ordinary  and  necessary  ex- 

penses actually  paid  within  the  year  out  of  income  in  the  main- 
tenance and  operation  of  its  business  and  property,  including  a 
reasonable  allowance  for  depreciation  by  use,  wear  and  tear  of 
property  from  which  the  income  is  derived  and  in  the  case  of 
mines  and  quarries*  an  allowance  for  depletion  of  ores  and  other 
natural  deposits  on  the  basis  of  their  actual  original  cost  in  cash 
or  the  equivalent  of  cash ; and  including  also  interest  paid  on  its 
bonded  or  other  indebtedness  to  an  amount  of  such  indebted- 
ness not  exceeding  its  paid  up  capital  stock  outstanding  at  the 
close  of  the  year;,  provided,  that  the  amount  of  such  capital 
stock  shall  in  no  case  exceed  the  clear  value  of  its  assets  over  and 
above  all  indebtedness  and  liabilities.  (1913  c.  720.) 


14 


The  Wisconsin  Income  Tax  Law. 


Payments  made  for  additions  or  improvements  are  not  “ordi- 
nary or  necessary  expenses’ ’ and  are  not  deductible  from  in- 
come. “Repairs”  properly  defined  are  deductible,  but  renew- 
als or  replacements  of  entire  units  of  property,  suck  as  ma- 
chines, are  properly  covered  by  depreciation,  past  or  current,  do 
not  constitute  “repairs,”  and  cannot  be  deducted  from  income. 

Experience  has  shown  that  it  is  impracticable  to  allow  depre- 
ciation in  excess  of  that  actually  recorded  on  the  books  of  the 
corporation.  Unless  the  depreciation  is  certain  enough  to  be 
officially  recognized  by  the  corporation  on  its  books,  it  cannot  be 
regarded  as  reasonable.  Confusion  and  duplicate  deduc- 
tions almost  inevitably  occur  whenever  any  other  procedure  is 
followed.  Depreciation  is  limited  to  deteroriation  or  exhaus- 
tion “by  use,  wear  and  tear,”  and  does  not  cover  fluctuations 
in  market  value.  Depreciation  of  merchants’  stocks  cannot  be 
allowed  as  such  since  it  is  properly  cared  for  in  the  inventories, 
if  the  goods  are  still  on  hand,  or  if  they  have  been  sold,  is  prop- 
erly represented  in  the  decreased  receipts  from  sales.  Moreover 
the  inventories  at  the  beginning  and  end  of  the  year  must  be  on 
the  same  basis;  if  at  the  beginning  of  the  year  stock  is  inven- 
toried at  cost,  it  must  be  so  inventoried  at  the  end  of  the  year. 

The  amount  of  interest  deductible  as  an  item  of  expense  ,is 
limited  to  the  amount  payable  on  an  indebtedness  not  in  excess 
of  the  paid  up  capital  stock  outstanding  at  the  close  of  the  year. 
Thus  a corporation  whose  capital  stock  on  December  31,  1913, 
was  $100,000  could  not  deduct  as  interest  more  than  the  amount 
necessary  for  the  payment  of  interest  on  that  sum.  Assuming 
six  per  cent  to  be  the  rate  of  interest  which  the  particular  cor- 
poration in  question  is  paying,  then  not  more  than  $6,000  could 
be  deducted.  On  the  other  hand,  if  its  indebtedness  were  all 
bonded  and  amounted  to  $150,000,  with  interest  at  four  per  cent, 
then  not  more  than  four  per  cent  on  the  $100,000  paid  up  capi- 
tal stock  could  be  deducted.  Furthermore,  whenever  the  clear 
value  of  a corporation’s  assets  exceeds  its  liabilities  by  less  than 
its*  paid  up  capital  stock,  then  the  allowance  deduction  because 
of  interest  on  indebtedness  is  limited  by  the  difference  between 
its  assets  and  liabilities. 

If  assets  are  less  than  capital  stock  the  limitation  is  fixed  by 
the  amount  of  assets.  If  paid  up  capital  stock  is  less  than  as- 
sets the  paid  up  capital  stock  fixes  the  limitation. 


(The  Wisconsin  Income  Tax  Law. 


15 


Losses. 

Section  1087m — 3.  (c)  Losses  actually  sustained  within  the 

year  and  not  compensated  for  by  insurance  or  otherwise. 

This  provision  limits  deductions  for  losses  to  those  which  were 
sustained  during  the  year  covered  by  the  return  and  cannot  be 
extended  to  claims  which  became  worthless  prior  to  that  time, 
unless  they  became  definite  and  were  satisfied  or  charged  off 
during  the  year.  In  no  event  can  losses  which  occurred  prior 
to  the  enactment  of  the  income  tax  law  be  allowed  as  deductions. 
It  is  believed  that  the  legislature  intended  the  provisions  of  the 
law  relating  to  assessment  of  income  and  deduction  of  losses  to 
be  correlative  and  that  a loss  resulting  from  a given  transaction 
should  not  be  allowed  as  a deduction  unless  the  profit  from  such 
transaction,  if  one  had  been  realized,  could  be  taxed  as  income. 
This  rule  prohibits  the  deduction  of  losses  resulting  from  busi- 
ness transacted  without  the  state  the  profit  from  which  could 
not  be  taxed  if  one  had  been  realized.  Bad  accounts  may  be  de- 
ducted as  losses  if  previously  reported  as  income  but  not  other- 
wise. The  exact  amount  of  the  loss  and  the  manner  in  which 
it  occurred  must  be  fully  set  forth  in  order  to  secure  the  deduc- 
tion. 

Taxes. 

Section  1087m — 3.  .(d)  Sums  paid  by  such  person  within  the 
year  for  taxes  imposed  by  any  state  of  this  union  or  subdivision 
thereof,  or  any  territory  or  possession  of.  the  United  States,  upon 
the  source  from  which  the  income  taxed  by  this  act  is  derived. 

This  section  refers  to  general  taxes  paid  upon  property  from 
which  the  income  is  derived.  Taxes  paid  upon  unimproved  real 
estate  and  upon  idle  property  held  for  investment  or  speculation 
cannot  be  deducted.  Income  taxes  paid  in  cash  may  be  de- 
ducted as  “necessary  expenses.”  Taxes  paid  by  corporations 
cannot  be  allowed  as  deductions  from  the  income  of  the  stock- 
holder. Special  assessments  are  not  to  be  considered  as  taxes 
because  they  are  based  on  the  theory  that  the  property  is  bene- 
fited to  the  amount  of  the  special  assessment  imposed. 

Dividends. 

Section  1087m — 3.  (e)  Dividends  or  income  received  with- 

in the  year  from  stocks  or  interest  in  any  copartnership,  corpo- 
ration, joint  stock  company  or  association,  the  income  of  which 
shall  have  been  assessed  under  the  provisions  of  this  act ; pro- 


16 


The  Wisconsin  Income  Tax  Law. 


vided  that  when  only  part  of  the  income  of  the  copartnership, 
corporation,  joint  stock  company  or  association  from  which  such 
dividend  or  income  was  received  shall  have  been  assessed  under 
this  act  only  a corresponding  part  of  such  dividend  or  income 
shall  be  deducted;  provided,  further,  that  such  copartnership, 
corporation,  joint  stock  company  or  association  report  the  name 
and  address  of  each  person  owning  stocks  or  having  such  inter- 
est and  the  amount  of  dividends  or  income  paid  such  person  dur- 
ing the  assessment  year.  (1913  c.  720.) 

The  object  of  this  paragraph  is  to  prevent  double,  taxation. 
It  means  simply  that  any  corporation  owning  stock  or  interest  in 
any  copartnership,  corporation,  joint  stock  company  or  associ- 
ation may  deduct  from  its  return  of  income  that  proportion  of 
the  dividends  or  income  upon  which  income  taxes  have  already 
been  paid.  If  the  copartnership  or  corporation  does  not  report 
the  name  and  address  of  the  persons  owning  stocks  or  interest 
and  the  amount  of  dividends  or  income  paid,  the  deductions 
cannot  be  allowed.  The  reports  of  copartnerships  will  be  made 
to  the  income  tax  assessors.  Corporations  will  report  to  the  tax 
commission. 

Bank  Dividends. 

Section  1087m — 3.  (g)  Dividends  received  from  state  banks, 

national  banks,  mutual  savings  banks  and  trust  companies  sub- 
ject to  taxation  by  this  state.  (1913  c.  615.) 

Under  this  provision  bank  dividends  may  be  deducted,  al- 
though banks  paying  such  dividends  are  not  assessed  under  this 
act.  (See  1087m — 5,  sub.  2.)  The  personalty  tax  on  bank  stock 
cannot  be  used  to  offset  the  income  tax.  (See  section  1087m— 
26.)  Bank  stock  is  assessable  as  heretofore  under  the  property 
tax  law  and  has  been  entirely  separated  from  any  connection  with 
the  income  tax.  Logically  the  personal  property  tax  paid  upon 
such  stock,  whether  paid  by  the  bank  or  the  individual  stock- 
holder, is  the  tax  of  the  corporation  and  cannot  be  used  as  an 
offset  against  the  income  tax  of  the  stockholder. 


Ti-ie  Wisconsin  Income  Tax  Law. 


17 


III. 

DEDUCTIONS  ALLOWED  TO  INDIVIDUALS. 


Section  1087m — 4.  Persons  other  than  corporations,  joint 
stock  companies  or  associations,  in  reporting  incomes  for  purposes 
of  taxation  shall  be  allowed  the  following  deductions: 

Wages  and  salaries. 

(a)  Payments  made  within  the  year  for  wages  of  employees  and 
a reasonable  allowance  for  services  of  copartners  or  members  of  a 
firm  actually  rendered  in  producing  such  income.  But  no  deduc- 
tions shall  be  made  for  any  amount  paid  for  personal  services  un- 
less there  be  reported  the  name  and  address  and  amount  paid  each 
such  employee  or  copartner  to  whom  a sum  of  seven  hundred  dol- 
lars or  more  shall  have  been  paid  during  the  assessment  year. 

Deductions  of  reasonable  salaries  by  copartners  is  now  ex- 
plicitly authorized. 

Ordinary  and  necessary  expenses. 

(aa)  The  ordinary  and  necessary  expenses  actually  paid  within 
the  year  in  carrying  on  the  profession,  occupation  or  business 
from  which  the  income  is  derived,  including  a reasonable  allow- 
ance for  depreciation  by  use,  wear  and  tear  of  the  property  from 
which  the  income  is  derived,  and  in  the  case  of  mines  and  quar- 
ries an  allowance  for  depletion  of  ores  and  other  natural  deposits 
on  the  basis  of  their  actual  original  cost  in  cash  or  the  equivalent 
of  cash.  (1913  c.  7 20) 

' •l«‘'  \ / 

Losses. 

Section  1087m — 4.  (b)  Losses  during  the  year  and  not  com- 

pensated for  by  insurance  or  otherwise. 

See  note  to  section  1087m — 3 (c). 

Dividends. 

Section  1087m — 4.  (c)  Dividends  or  incomes  received  by 

any  person  from  stocks  or  interest  in  any  copartnership,  corpora- 
tion, joint  stock  company  or  association,  the  income  of  which  shall 
have  been  assessed  under  the  provisions  of  this  act;  provided 
that  when  only  part  of  the  income  of  any  copartnership,  corpo- 
ration, joint  stock  company  or  association  shall  have  been  as- 
sessed under  this  act  only  a corresponding  part  of  the  dividends 
or  income  received  therefrom  shall  be  deducted,  and  provided, 


18 


The  Wisconsin  Income  Tax  Law. 

further,  that  said  copartnership,  corporation,  joint  stock  com- 
pany or  association  report  the  name  and  address  of  each  person 
owning  stock  or  having  such  interest  and  the  amount  of  divi- 
dends or  income  paid  such  person  during  the  assessment  year. 
(1913  c.  720.) 

See  note  to  section  1087m — 3(e).  The  amendment  of  1913 
above  given  limits  the  deduction  permitted  the  individual  to  the 
same  ratio  that  applies  to  the  corporation,  etc.,  where,  for  in- 
stance, the  corporation  is  transacting  business  within  and  with- 
out the  state. 

Interest  on  indebtedness. 

Section  1087m — 4.  (d)  .Interest  paid  within  the  year  on  ex- 
isting indebtedness ; provided,  the  debtor  reports  the  amount  so 
paid,  the  form  of  the  indebtedness,  together  with  the  name  and 
address  of  the  creditor. 

Pensions. 

Section  1087m- — 4.  (g)  Pensions  received  from  the  United 

States. 

Taxes. 

Section  1087m — 4.  (h)  Taxes  paid  by  such  persons  during 

the  year  other  than  inheritance  taxes  upon  the  property  or  busi- 
ness from  which  the  income  hereby  taxed  is  derived. 

This  does  not  mean  that  all  taxes  can  be  deducted,  but  only 
those  paid  upon  the  property  which  produced  the  income. 

Income  taxes,  however,  paid  in  cash  may  be  deducted  as  neces- 
sary expenses  of  the  year  in  which  they  are  actually  paid,  if 
separately  reported  at  the  place  provided  therefor  on  the  blank 
form.  Special  assessments  are  not  deductible.  See  note  to  sec- 
tion 1087m — 3 (d). 

Inheritances. 

Section  1087m — 4.  (i).  All  inheritances,  devises  and  bequests 

received  during  the  year  which  are  subject  to  and  have  complied 
with  the  inheritance  tax  laws  of  this  state.  ( 1913  c.  720.) 

Inheritances,  etc.,  received  by  resident  beneficiaries  from 
estates  probated  without  the  state  are  taxable,  but  inheritances, 
etc.,  which  are  subject  to  and  have  complied  with  the  inherit- 
ance tax  law  of  Wisconsin,  are  not  taxable  whether  they  have 
been  actually  taxed  or  not. 


The  Wisconsin  Income  Tax  Law.  19 

To  illustrate : Under  the  inheritance  tax  law  the  widow  has 

an  exemption  of  $10,000.  This  amount  of  $10,000  having  com- 
plied with  the  inheritance  tax  law  of  this  state,  ” is  not  subject 
to  the  income  tax  although  it  has  paid  no  inheritance  tax.  It  is 
compliance  with  the  law  that  governs,  whether  any  tax  be  paid 
or  not.  , 

Life  insurance. 

Section  1087m — 4.  (j)  Insurance  to  the  total  amount  of  ten 

thousand  dollars  received  by  any  person  or  persons  legally  de- 
pendent upon  the  decedent,  in  payment  of  a death  claim  by  any 
insurance  company,  fraternal  benefit  society  or  other  insurer. 

It  is  only  the  life  insurance  in  excess  of  $10,000  which  is  sub- 
ject to  an  income  tax. 

The  expression  ‘ 'legally  dependent  upon  the  decedent’ ’ is 
more  restricted  in  its  application  than  is  perhaps  generally  sup- 
posed. Children  are  legally  dependent  upon  their  parents  until 
they  become  of  age  and  wives  are  legally  dependent  upon  their 
husbands.  But  parents  are  not  legally  dependent  upon  their 
children  nor  husbands  upon  their  wives  except  in  cases  where 
such  person  is  “a  poor  person  who  is  blind,  old,  lame , impotent 
or  decrepit  so  as  to  be  unable  to  maintain  himself.”  (See  sec- 
tion 1502,  revised  statutes,  as  amended  by  chapter  207,  laws  of 
1909).  Brothers  and  sisters,  uncles  and  aunts  and  nephews  and 
nieces,  grandparents  and  grandchildren  are  not  “legally  de- 
pendent” upon  each  other  except  in  certain  special  circum- 
stances resulting  from  court  proceedings. 

Upon  the  marriage  of  a daughter  the  obligation  of  the  par- 
ent to  support  her  ceases  as  the  husband  then  becomes  liable. 

A husband  is  under  no  legal  obligation  to  support  his  wife’s* 
parents.  A stepfather  is  not  necessarily  bound  to  support  a 
stepchild ; but  if  he  receives  the  child  into  his  family  and  treats 
it  as  a member  thereof,  he  stands  in  the  place  of  the  natural 
parent  and  the  reciprocal  rights,  duties  and  obligations  of  par- 
ent and  child  continue  as  long  as  such  relation  continues.  With 
the  exception  just  noted  a stepchild  is  not  bound  to  support  its 
step-parent. 

Bank  dividends. 

Section  1087m — 4.  (k)  Dividends  received  from  state  banks, 

national  banks,  mutual  savings  banks  and  trust  companies  sub- 
ject to  taxation  by  this  state.'  (1913  c.  615.) 

See  note  to  section  1087 — 3 (g). 


20 


The  Wisconsin  Income  Tax  Law. 


IV. 

EXEMPTIONS. 

Exemptions  to  individuals. 

Section  1087m — 5.  1.  There  shall  be  exempt  from  taxation 

under  this  act  income  as  follows,  to  wit : 

(a)  To  an  individual  income  up  to  and  including  eight  hun- 
dred dollars; 

(b)  To  husband  and  wife,  twelve  hundred  dollars; 

(c)  For  each  child  under  the  age  of  eighteen  years,  two  hun- 
dred dollars; 

(d)  For  each  additional  person,  who  is  actually  supported  by 
and  entirely  dependent  upon  the  taxpayer  for  his  support,  two 
hundred  dollars.  (1913  c.  720.) 

The  burden  of  proof  rests  on  the  person  claiming  exemption 
under  (d)  above  to  show  that  the  person  on  account  of  whom  he 
is  claiming  $200  additional  exemption  is  not  only  1 1 actually  sup- 
ported by”  him  but  is  also  “entirely  dependent  upon”  him. 

Nonresidents,  firms,  corporations,  etc.  Income  of  wife  and 
children. 

Section  1087m — ‘5.  1.  (e)  The  af presaid  exemption  shall  not 

apply  to  incomes  derived  from  sources  within  the  state  by  non- 
residents thereof,  nor  to  copartnerships,  corporations,  joint 
stock  companies  nor  associations.  In  computing  said  exemp- 
tions and  the  amounts  of  taxes  payable  by  persons  residing  to- 
gether as  members  of  a family,  the  income  of  the  wife  and  the  in- 
come of  each  child  under  eighteen  years  of  age  shall  be  added 
to  that  of  the  husband  or  father,  or  if  he  be  not  living,  to  that  of 
the  head  of  the  family  and  assessed  to  him.  The  taxes  levied 
thereon  shall  be  payable  by  such  husband  or  head  of  the  family, 
but  if  not  paid  by  him  may  be  enforced  against  any  person  whose 
income  is  included  in  the  assessment.  (1913  c.  720.) 

Banking,  religious,  educational,  scientific,  and  benevolent  as 
sociations. 

Section  1087m— 5.  2.  Income  of  state  banks,  national 
banks,  mutual  savings  banks,  trust  companies  and  building  and 
loan  associations  and  of  all  religious,  scientific,  educational,  be- 
nevolent or  other  corporations  or  associations  of  individuals  not 
organized  or  conducted  for  pecuniary  profit.  (1913  c.  615.) 

This  exemption  benefits  only  associations  and  not  individuals 
such  as  clergymen,  charity  workers,  and  the  like.  The  words 


The  Wisconsin  Income  Tax  Law.  21 

“pecuniary  profit”  are  evidently  taken  from  subdivision  3 of 
section  1038  of  the  statutes,  and  so  far  as  possible  should  receive 
the  same  construction  in  connection  with  income  taxation  as 
with  property  taxation.  Speaking  generally,  this  section  must 
be  strictly  interpreted  and  alf  doubts  resolved  in  favor  of  taxa- 
tion and  against  exemption.  For  example,  cooperative  associa- 
tions, other  than  mutual  savings  or  loan  and  building  associa- 
tions would  appear  to  be  plainly  subject  to  taxation  when  they 
make  and  declare  dividends  or  in  any  way  are  conducted  for 
the  pecuniary  profit  of  the  group  of  associates. 

Incomes  from  public  service  corporations. 

Section  1087m — 5.  3.  Incomes  derived  from  property  and 

privileges  by  persons  now  required  by  law  to  pay  taxes  or  license 
fees  directly  into  the  treasury  of  the  state  in  lieu  of  taxes,  and 
such  persons  shall  continue  to  pay  taxes  and  license  fees  as  here- 
tofore. 

This  section  would  seem  to  exempt  from  the  payment  of  in- 
come tax: 

a.  Railroad  companies 

b.  Palace  and  sleeping  car  companies 

c.  Freight  line  and  equipment  companies  « 

d.  Express  companies’ 

e.  Street  railway  companies  including  connected  electric 

light,  heat  and  power  companies 

f.  Telegraph  companies 

g.  Fire  insurance  companies 

h.  Life  insurance  companies 

i.  Accident,  surety,  etc.  companies 

j.  Telephone  companies 

k.  Title  guaranty  companies. 

This  section  does  not  exempt  water,  light,  heat,  power  and 
other  public  utilities  taxed  locally,  nor  does  it  exempt  from  the 
income  tax  income  from  outside  investments  in  property,  such 
as  lands,  securities,  etc.,  not  used  in  the  operation  of  the  corpo- 
ration as  a public  utility. 

Public  funds. 

Section  1087m — 5.  4.  Income  received  by  the  United  States, 
the  state  and  all  counties,  cities,  villages,  school  districts  or  other 
political  units  of  this  state. 


22 


The  Wisconsin  Income  Tax  Law. 


V. 

RATES. 

Rates  for  individuals. 

Section  1087m — 6.  1.  -The  tax  to  be  assessed,  levied  and  col- 

lected upon  the  incomes  of  all  persons,  except  as  otherwise  pro- 
vided by  law,  after  making  such  deductions  and  exemptions  as 
are  hereinbefore  allowed,  shall  be  computed  at  the  following 
rates,  to  wit : 

(a)  On  the  first  one  thousand  dollars  of  taxable  income  or  any 
part  thereof,  at  the  rate  of  one  per  cent ; 

(b)  On  the  second  one  thousand  dollars  or  any  part  thereof, 
one  and  one-fourth  per  cent; 

(c)  On  the  third  one  thousand  dollars  or  any  part  thereof, 
one  and  one-half  per  cent ; 

(d)  On  the  fourth  one  thousand  dollars  or  any  part  thereof, 
one  and  three;fourths  per  cent ; 

(e)  On  the  fifth  one  thousand  dollars  or  any  part  thereof,  two 
per  cent; 

(f)  On  the  sixth  one  thousand  dollars  or  any  part  thereof, 
two  and  one-half  per  cent ; 

(g)  On  the  seventh  one  thousand  dollars  or  any  part  thereof, 
three  per  cent ; 

(h)  On  the  eighth  one  thousand  dollars  or  any  part  thereof, 
three  and  one-half  per  cent; 

(i)  On  the  ninth  one  thousand  dollars  or  any  part  thereof,  four 
per  cent; 

(j)  On  the  tenth  one  thousand  dollars  or  any  part  thereof, 
four  and  one-half  per  cent; 

(k)  On  the  eleventh  one  thousand  dollars  or  any  part  thereof, 
five  per  cent; 

(l)  On  the  twelfth  one  thousand  dollars  or  any  part  thereof, 
five  and  one-half  per  cent ; 

(m)  On  any  sum  of  taxable  income  in  excess’  of  twelve  thou- 
sand dollars,  six  per  cent. 

<-  In  the  case  of  individuals,  the  rate  for  each  thousand  dollars 
up  to  $12,000  is  distinct  and  separate.  The  tax  upon  $5,000 
would  consist  of 


1%  upon  the  IsL  $1,000 $10.00 

1V4%  upon  the  2nd  $1,000 12.50 

1%%  upon  the  3rd  $1,000 15.00 

1%%  upon  the  4th  $1,000 17.50 

2%  upon  the  5th  $1,000 20.00 


Total  tax  $75.00 


The  Wisconsin  Income  Tax  Law.  23 

$75.00  would  be  1%%  of  $5,000.  In  like  manner  the  rate  for 
the  twelfth  thousand  is  5%% ; but  the  amount  of  tax  payable 
upon  $12,000  would  be  only  $355,  or  2.95%.  The  rate  on  that 
portion  of  incomes  which  exceeds  $12,000  is  6%  but  the  tax 
never  quite  equals  that  percentage. 

The  following  table  applying  to  even  thousands  may  be  of  as- 
sistance in  computing  rates : 


±. 


Taxable 

income. 

Hate 

per 

cent. 

Tax. 

Total 

income 

taxed. 

Total 

tax. 

True  rate 
on  whole 
amount. 

1st 

$1,000 

$10  00 

$1,000 

$10  00 

% 

1. 

2nd 

1,000 

11 

12  50 

2,000 

22  50 

1.125 

3rd 

1,000 

14 

15  00 

3,000 

37  50 

1.25 

4th 

1,000 

U 

17  50 

4,000 

55  00 

1.373 

5th 

6 th.' 

1,000 

2 

20  00 

5,000 

75  00 

1.5 

1,000 

24 

25  00 

6.000 

100  00 

1.6667 

7th 

1,000 

3 

30  00 

7,000 

130  00 

1.8571 

8th 

1,000 

34 

35  00 

8,000 

165  00 

2.0625 

9th 

1,000 

4 

40  00 

9,000 

205  00 

2.2778 

10th 

1,000 

44 

45  00 

10,000 

250  00 

2.5 

11th 

1,000 

5 

50  00 

11,000 

300  00. 

2.7273 

12th 

1,000 

54 

55  00 

12,000 

355  00 

2.9582 

13th 

1,000 

6 

60  00 

13,000 

415  00 

3.1923 

15th 

1,000 

6 

60  00 

15,000 

535  00 

3.5667 

20th 

1,000 

6 

60  00 

20,000 

835  00 

4.175 

m 

To  compute  the  amount  of  tax  on  a taxable  income  which  ex- 
ceeds $12,000,  add  6%  of  the  excess  over  $12,000  to  $355. 

Rates  for  corporations. 

Section  1087m — 6.  2.  The  taxes  to  be  assessed,  levied  and 

collected  upon  the  incomes  of  corporations,  joint  stock  com- 
panies or  associations,  after  making  such  deductions  and  exemp- 
tions as  hereinbefore  allowed,  shall  be  computed  at  the  follow- 
ing rates,  to  wit : 

On  the  first  $1,000  of  taxable  income  or  any  part  thereof.  . . .2% 
On  the  second  $1,000  of  taxable  income  or  any  part  thereof.  .2y2 
On  the  third  $1,000  of  taxable  income  or  any  part  thereof. . .3 
On  the  fourth  $1,000  of  taxable  income  or  any  part  thereof.  .Sy2 
On  the  fifth  $1,000  of  taxable  income  or  any  part  thereof.  . . .4 
On  the  sixth  $1,000  of  taxable  income  or  any  part  thereof. . .5 
On  the  seventh  $1,000  of  taxable  income  or  any  part  thereof  6 

On  all  taxable  income  in  excess  of  $7,000 6 

(1913  c.  720.) 

The  first  step  toward  computing  the  income  tax  is  to  ascertain 
the  amount  of  taxable  income.  By  taxable  income  is  meant  the 


24 


The  Wisconsin  Income  Tax  Law. 


gross  income  for  the  year  less  the  deductions  and  exemptions. 
This  can  perhaps  best  be  illustrated  by  a concrete,  example  as 
follows : 

Gross  Income: 

Operation  of  business  (total  cash  and  credit  sales) $118,257.60 

Interest  on  mortgages  615.38 

Dividends  on  stocks 1,000.00 

Interest  on  bonds  750.00 

Collection  of  claims  heretofore  charged  off  as  loss 300.00 

Sale  of  capital  assets  purchased  January  1906  for  $5,000 

sold  January  1913  for  6,820 


Profit $1,820 

( January  1906  to  January  1911  = 5 years) 

( ) 2/7  assignable 

(January  1911  to  January  1913  = 2 years)  to  1913  or 520.00 


Total  income  $121,442.98 

Inventory  January  1,  1914 41,008.31 


$162,451.29 

Inventory  January  1,  1913 39,530.04 


Total  income  and  inventories $122,921.25 

Gross  Deductions: 

Goods  and  materials  purchased  during  1913 $98,528.71 

Wages  and  salaries 8,320.00 

Repairs 736.07 

Rent  1,200.00 

Depreciation  actually  written  off  on  books-of  company 800.00 

Losses  of  the  year  not  compensated  for  by  insurance  or 

otherwise  .. 225.79 

Taxes  paid  on  property  used  in  production  of  company’s 

income  971.25 

Dividends  received  from  corporations  assessed  for  state  in- 
come tax  800.00 

Interest  paid  on  indebtedness 913.44 

Federal  excise  tax  paid  during  1913 28.78 

Other  necessary  expenses  (properly  enumerated  in  detail  in 

space  provided  therefor)  1,607.21 


Total  deductions  $114,131.25 

Total  taxable  income 8,790.00 

The  tax  on  the  above  assessment  would  be 

for  the  first  $6,000 $200.00 

for  the  remaining  $2,790  at  6% 167.40 


Total  tax  $367.40 

The  foregoing  example  is  presented  as  a simple  illustration  of 
the  most  important  features  of  an  income  account  such  as  the 
commission  requires  to  be  filled  in  by  all  corporations  licensed 
to  transact  business  within  this  state. 

The  rate  upon  corporation  income  is  different  for  each  $1,000 
up  to  $7,000.  For  example,  the  rate  on  the  fifth  thousand  dol- 


The  Wisconsin  Income  Tax  Law. 


25 


lars  is  four  per  cent  but  this  does  not  apply  to  the  constituent 
parts  below  $5,000.  The  tax  upon  $5,000  would  consist  of : 


2%  upon  the  1st  $1,000 $20.00 

2 1/2%  upon  the  2nd  $1,000 25.00 

3%  upon,  the  3rd  $1,000 30.00 

3i/2%  upon  the  4th  $1,000 35.00 

4%  upon  the  5th  $1,000 40.00 


Total  tax  $150.00 

$150  is  3%  of  $5,000. 


The  following  table,  which  applies  only  to  even  thousands,  may 
be  helpful  in  computing  rates : 


Taxable  income. 

Rate  per 
cent. 

Tax. 

J Tot  al 
income 
taxed. 

Total  tax. 

True  rate  on 
whole 
amount  in 
even 

thousands. 

1st  $1,000 

' 2 1 

$20  00 

$1,000 

$20  00 

2% 

2nd  $1,000 

2i 

25  00 

2,000 

45  00 

2.25 

3rd  $1,000 

3 

30  00 

3,000 

75  00 

2.5 

4th  $1,000 

3i 

35  00 

4,000 

110  00 

2.75 

5th  $1,000 

4 

40  00 

5,000 

150  00 

3. 

6th  $1,000 

5 

50  00 

6,000 

200  00 

3.3333 

7th  $1,000 

6 

60  00 

7.000 

260  00 

3.7143 

8 h- $1,000 

6 

60  00 

8,000 

320  00 

4. 

9th  $1,000 

6 

60  00 

9,000 

380  00 

4 2292 

10th  $1,000 

6 

60  00 

10,000 

440  00 

4.4" 

15th  $1,000 

6 

60  00 

15,000 

740  00 

4.9333 

20th  $1,000 

6 

60  00 

20,000 

1 

1,040  00 

5.2 

26 


The  Wisconsin  Income  Tax  Law. 


PART  II. 


ADMINISTRATION. 


Division  of  state  into  assessment  districts. 

Section  1087m — 8.  1.  The  state  shall  be  divided  into  assess- 

ment districts  by  the  state  tax  commission,  but  in  no  instance 
shall  a county  be  divided. 

In  accordance  with  this  authority  the  tax  commission  has 
made  the  following  division  of  the  state  into  forty-one  districts : 


No.  of 
district 

1.  Kenosha 

2.  Racine 

3.  Walworth 

4.  Rock 

5.  Green,  Lafayette 

6.  Grant,  Iowa 

7.  Dane 

8.  Jefferson 

9.  Waukesha 

10.  Milwaukee 

11.  Ozaukee,  Washington 

12.  Dodge 

13.  Columbia 

14.  Sauk 

15.  Crawford,  Richland 

16.  La  Crosse 

17.  Adams,  Juneau 

18.  Green  Lake,  Marquette, 

Waushara 

19.  Winnebago 

20.  Fond  du  Lac 


No.  of  ; I 

district 

21.  Sheboygan 

22.  Calumet,  Manitowoc 

23.  Door,  Kewaunee 

24.  Brown,  Oconto 

25.  Outagamie,  Waupaca 

26.  Portage,  Wood 

27.  Clark,  Jackson 

28.  Buffalo,  Pepin,  Trempealeau 

29.  Pierce,  St.  Croix 

30.  Chippewa,  Barron 

31.  Marathon 

32.  Shawano,  Langlade 

33.  Florence,  Forest,  Marinette 

34.  Oneida,  Vilas,  Lincoln 

35.  Price,  Taylor 

36.  Rusk,  Sawyer 

37.  Burnett,  Polk 

38.  Douglas,  Washburn 

39.  Ashland,  Bayfield,  Iron 

40.  Dunn,  Eau  Claire 

41.  Monroe,  Vernon 


The  Wisconsin  Income  Tax  Law.  27 

Assessors  of  income  ; how  appointed. 

Section  1087m — 8.  2.  Not  less  than  thirty  days  prior  to  the 

first  of  March,  1912,  there  shall  he  selected  and  appointed  by  the 
state  tax  commission  an  assessor  of  incomes  for  £ach  assessment 
district  in  the  state,  who  shall  hold  office  for  a term  of  three 
years  unless  sooner  removed  as  hereinafter  provided.  Such  as- 
sessor shall  be  a citizen  and  an  elector  of  this  state,  but  need  not 
be  a resident  of  the  district  in  which  he  is  appointed  to  serve; 
provided,  however,  that  so  far  as  practicable,  preference  shall  be 
given  in  making  such  appointments  to  residents  of  the  districts.  ^ 

Assessors  of  incomes;  how  transferred  or  removed. 

Section  1087m — 8.  3.  The  tax  commission  may  in  its  dis- 

cretion transfer  any  assessor  of  incomes  from  one  district  to 
another  and  may  remove  any  assessor  of  incomes  or  his  deputy 
from  office. 

Oath  to  be  taken  and  filed. 

Section  1087m— 8.  4.  Before  entering  upon  his  duties  such 

assessor  of  incomes  shall  subscribe  to  the  constitutional  oath  and 
file  the  same  in  the  office  of  the  secretary  of  state.  He  shall  be 
under  the  direction  and  control  of  the  state  tax  commission,  and 
shall  make  such  reports  to  the  commission,  to  the  county  board 
of  review  and  the  county  board  of  supervisors,  and  perform  such 
other  duties  as  the  commission  shall  direct.  (1913  c.  443.) 

Deputies  and  assistants. 

Section  1087m — 8.  5.  The  state  tax  commission  may  authorize 

any  assessor  of  incomes  to  appoint  such  deputies  and  other  as- 
sistants as  may  be  required  for  the  proper  performance  of  his 
duties.  Such  deputies  shall  qualify  in  like  manner  and  possess 
the  same  powers  as  the  assessor. 

Salaries  and  expenses. 

Section  1087m — 9.  1.  The  salaries  of  the  assessors  of  in- 

comes and  their  deputies  and  assistants  shall  be  fixed  by  the  state 
tax  commission,  but  such  salaries,  together  with  the  expenses  of 
such  assessors  and  their  deputies  and  assistants,  shall  not  in  any 
year  exceed  in  amount  five  cents  for  every  thousand  dollars  of 
the  valuation  of  all  property  as  fixed  by  the  tax  commission  in 
the  state  assessment  of  the  preceding  year.  The  assessor  shall  be 
furnished  all  necessary  printing,  stationery,  postage  and  office 
equipment,  and*  he  and  his  deputies  shall  be  entitled  to  receive 
their  actual  necessary  expenses  incurred  in  the  performance  of 
their  duties.  The  salaries  of  the  assessor  and  his  assistants,  and 
all  such  expenditures  shall  be  audited  and  paid  out  of  the  state 
treasury  in  the  same  manner  as  other  similar  salaries  and  state 
expenses  are  audited  and  paid. 


28  The  Wisconsin  Income  Tax  Law. 

2.  The  county  board  of  each  county  in  which  the  assessor  of 
incomes  has  an  office  shall  provide  at  the  expense  of  the  county 
a suitable  room  or  rooms  in  the  courthouse  or  other  convenient 
building  at  the  county  seat  for  the  use  of  such  assessor.  If  any 
county  shall  fail  or  refuse  to  furnish  suitable  quarters  for  the 
use  of  the  assessor  of  incomes  as  herein  provided  the  tax  com- 
mission may  procure  such  quarters  at  the  expense  of  the  county 
primarily  responsible  therefor.  ( 1913  c.  487.) 

"When  and  by  whom  assessments  made. 

Section  1087m — 10.  1.  The  state  tax  commission  and  the 

assessors  of  incomes  shall  annually  on  the  first  day  . of  January, 
or  as  soon  thereafter  as  practicable,  proceed  to  assess  as  herein- 
after provided  every  income  received  during  the  preceding  cal- 
endar year  liable  to  taxation  under  the  provisions  of  this  act. 
Liability  to  taxation  for  income  which  follows  the  residence  of 
vthe  recipient  in  the  case  of  persons  moving  into  or  out  of  the  state 
shall  be  determined  by  the  residence  of  such  person  on  the 
thirty-first  day  of  December  of  the  income  year,  and  liability  to 
taxation  on  like  income  in  the  case  of  corporations  which  have 
been  created  or  dissolved  before  assessment  shall  be  determined 
by  the  status  of  such  corporation  on  the  same  date.  The  assess- 
ment of  corporations,  joint  stock  companies  and  associations 
shall  be  made  by  the  state  tax  commission,  and  the  assessment  of 
persons  other  than  corporations,  joint  stock  companies  and  asso- 
ciations shall  be  by  the  county  assessor  of  incomes.  (1913  c. 
720.) 

Powers  of  tax  commission  and  assessors  of  incomes. 

Section  1087m — 10.  2.  In  the  performance  of  such  duty  the 

state  tax  commission  and  the  county  assessors  of  incomes  shall 
respectively  possess  all  powers  now  or  hereafter  granted  by  law 
to  the  state  tax  commission  or  assessors  in  the  assessment  of  per- 
sonal property  and  also  the  power  to  estimate  incomes. 

Among  the  powers  conferred  by  this  section  are  those  set  forth 
in  section  1056  of  the  Revised  Statutes  authorizing  the  assessor 
to  examine  persons  under  oath  and  to  require  them  to  make 
sworn  statements.  The  “ power  to  estimate  incomes’’  is  the  so- 
called  “ doomage  power.” 

* 

Returns  by  corporations. 

Section  1087m — 10.  3.  Every  corporation,  joint  stock  com- 

pany or  association,  whether  taxable  under  this  act  or  not,  shall 
furnish  to  the  tax 'commission  a true  and  accurate  statement  at 
such  time,  in  such  manner  and  form  and  setting  forth  such  facts 
as’  said  commission  shall  deem  necessary  to  enforce  the  provisions 
of  this  act.  Such  statement  shall  be  made  upon  the  oath  or  af- 


The  Wisconsin  Income  Tax  Law. 


20 


firmation  of  the  president,  vice  president  or  other  principal  officer 
and  the  treasurer  of  said  corporation,  joint  stock  company  or  as- 
sociation. 

Every  corporation  must  make  a verified  return,  whether  it 
has  any  income  or  not.  The  fact  that  it  has  no  income  is  to  be 
determined  by  the  commission,  not  by  the  corporation. 

Public  service  corporations  and  banking,  trust,  benevolent, 
scientific,  educational  or  religious  associations  are  required  to 
make  a statement  of  the  names  and  addresses  of  persons  in  their 
employ,  residing  in  Wisconsin,  who  receive  salaries  of  more  than 
$700  and  the  amount  paid  to  each.  Blanks  for  that  purpose 
will  be  forwarded  to  all  corporations  of  which  the  commission 
has  knowledge. 

Failure  to  receive  blanks,  however,  will  not  relieve  them  from 
the  duty  of  making  returns. 

Returns  by  individuals. 

Section  1087m — 10.  4.  Whenever  in  the  judgment  of  the 

assessor  of  incomes  any  person  in  his  district  other  than  a corpo- 
ration, joint  stock  company  or  association  shall  be  subject  to  an 
income  tax  under  the  provisions  of  this  act,  he  shall  require  such 
person  to  make  report  at  such  time  and  in  such  manner  and  form 
as  the  tax  commission  may  prescribe,  specifying  particularly 
among  other  items  the  amount  of  income  received  from  services, 
unsecured  notes,  mortgages,  bonds,  stocks  and  real  estate,  the 
amount  of  income  received  by  his  wife  and  each  child  under 
eighteen  years  of  age  residing  together  with  him  as  members  of 
the  family  and  such  other  information  as  the  commission  shall 
deem  necessary  to  enforce  the  provisions  of  this  act.  (1913  c. 
720.) 

The  fact  that  the  individual  is  not  subject  to  an  income  tax 
does  not  relieve  him  from  the  necessity  of  making  a return  at 
the  time  prescribed  by  the  tax  commission.'  The  penalties  for 
failing  or  refusing  to  make  a return  will  be  found  in  section 
1987m — 12,  sub.  3,  and  consist  of  a fine  not  to  exceed  $500,  or  im- 
prisonment, or  both,  together  with  the  costs  of  prosecution.  A 
person  who  is  subject  to  the  income  tax  is  not  relieved  from  the 
obligation  to  make  return  by  the  fact  that  he  has  not  been  for- 
mally required  to  do  so  by  the  assessor. 

Returns  by  guardians,  trustees,  etc. 

Section  1087m — 10.  5.  Every  guardian,  trustee,  executor, 

administrator,  agent  or  receiver,  and  every  other  person  or  cor- 
poration acting  in  a fiduciary  capacity  shall  make  and  render 


30 


The  Wisconsin  Income  Tax  Law. 


to  the  assessor  of  incomes'  of  the  district  in  which  such  represen- 
tative resides,  a verified  list  or  return  of  the  amount  of  income 
received  by  him  for  such  person,  ward  or  beneficiary  together 
with  all  income  received  by  the  ward,  beneficiary,  deceased  or 
incompetent  person  whom  he  represents  or  succeeds  during  the 
year  covered  by  the  return  and  shall  be  liable  to  assessment  and 
taxation  therefor,  subject  to  the  deductions  and  exemptions  pro- 
vided in  this  chapter ; provided,  that  such  deductions  or  exemp- 
tions have  not  been  claimed  by  or  for  such  person,  ward  or  bene- 
ficiary in  another  capacity.  The  return  so  made  shall  be  signed 
by  the  person  rendering  it,  and  by  the  president  or  secretary 
thereof,  if  a corporation.  Every  person  subject  to  an  income 
tax  in  his  representative  capacity  under  this  subdivision  shall 
have  all  of  the  remedies  and  rights  of  reimbursement  for  any 
tax  assessed  against  or  paid  by  him  in  such  capacity  prescribed 
by  section  1044a  of  the  statutes.  (1913  c.  720.) 

This  section  differs  materially  from  the  wording  of  the  orig- 
inal section  in  the  original  law.  It  makes  clear  the  duty  of  the 
persons  acting  in  the  representative  capacities  named,  not  only 
as  to  making  the  return  but  also  as  to  their  responsibility  for  pay- 
ment of  the  tax,  at  the  same  time  securing  them  against  per- 
sonal loss  by  giving  them  a lien  upon  the  property  in  their  pos- 
session until  reimbursed.  Nonresident  beneficiaries  are  not  en- 
titled to  the  personal  exemptions.  If  the  trust  is  likely  to  ter- 
minate after  making  the  return  and  before  the  tax  is  payable, 
the  representative  should  retain  sufficient  funds  to  pay  the  tax. 

Penalty  on  assessor  for  questions  unanswered. 

Section  1087m — 10.  6.  For  each  question  unanswered  the 

assessor  or  deputy  assessor,  failing  to  present  satisfactory  cause 
for  such  omission  to  the  state  tax  commission,  shall  be  subject  to 
a penalty  of  five  dollars,  and  said  penalty  shall  be  deducted 
from  the  compensation  of  said  assessor  or  deputy  assessor  at  the 
time  such  compensation  is  paid. 

Additions  and  corrections  to  returns. 

Section  1087m — 11.  1.  Whenever  evidence  shall  be  produced 

before  the  state  tax  commission,  which  in  the  opinion  of  the  com- 
mission, justifies  the  belief  that  in  any  one  or  more  of  the  three 
next  previous  years  the  returns  made  by  any  corporation,  joint 
stock  company  or  association  are  incorrect,  or  are  made  with  false 
or  fraudulent  intent,  or  when  any  corporation,  joint  stock  com- 
pany or  association  has  failed  or  refused  to  make  a return  as  re- 
quired by  law  the  state  tax  commission  may  require  from  every 
such  corporation,  joint  stock  company  or  association  such  fur- 
ther information  with  reference  to  its  capital,  income,  losses, 


The  Wisconsin  Income  Tax  Law.  31 

expenditures  and  business  transactions  as  is  deemed  expedient. 
Upon  the  information  so  required  the  state  tax  commission  may 
make  such  additions  or  corrections  to  the  assessment  as  is  deemed 
true  and  just,  such  correction  to  be  made  in  the  next  tax  levy. 
Whenever  the  state  tax  commission  shall  so  increase  or  make  sub- 
ject to  tax  any  income,  it  shall  give  notice  in  writing  to  the  person 
liable  for  the  payment  of  the  tax  on  said  income  of  the  amount 
of  the  assessment.  Such  notice  may  be  served  by  registered 
mail. 

This  section  gives  the  tax  commission  power  to  correct  errors 
and  to  reassess  incomes  of  corporations  which  have  failed  to  pay 
the  taxes  due  because  of  false  or  erroneous  returns  at  any  time 
within  three  years. 

Penalty  on  corporation  for  false  or  fraudulent  return  or  fail- 
ure to  make  return. 

Section  1087m — 11.  2.  In  case  any  return  made  by  any  cor- 

poration, joint  stock  company  or  association  is  made  with  false 
or  fraudulent  intent  or  in  case  of  a refusal  or  neglect  to  make  a 
return  as  required  by  law,  and  an  additional  amount  is  discov- 
ered, the  amount  so  discovered  shall  be  subject  to  twice  the  orig- 
inal rate.  The  amount  so  added  to  the  tax  shall  be  collected  at 
such  time  and  in  such  manner  as  may  be  designated  by  the  state 
tax  commission. 

In  addition  to  the  power  to  reassess  corporations  for  taxes 
omitted  in  any  of  the  three  previous  years,  the  tax  commission  is 
authorized,  if  not  required,  to  tax  the  income  at  double  the  orig- 
inal rate.  In  the  case  of  failure  to  make  a return  the  tax  com- 
mission may  “ estimate  ” the  income  and  impose  the  double  tax 
rate  upon  the  income  thus  fixed. 

When  time  for  making  returns  may  be  extended. 

Section  1087m — 11.  3.  In  case  of  neglect  occasioned  by  the 
sickness  or  absence  of  an  officer  of  any  corporation,  joint  stock 
company  or  association  required  to  make  said  return,  or  for 
other  sufficient  reason,  the  state  tax  commission  may  allow  such 
further  time  for  making  and  delivering  such  return  as  it  may 
deem  necessary,  not  to  exceed  thirty  days. 

Penalty  on  corporation  for  making  false  return,  etc. 

Section  1087m — 11.  4.  If  any  of  the  corporations,  joint 
stock  companies  or  associations  aforesaid  shall  fail  or  refuse  to 
make,  a return  at  the  time  or  times  hereinbefore  specified  in  each 
year,  or  shall  render  a false  or  fraudulent  return,  such  corpora- 
tion, joint  stock  company  or  association  shall  be  liable  to  a pen- 


32 


The  Wisconsin  Income  Tax  Law. 


alty  of  not  less  than  one  hundred  dollars  and  not  to  exceed  five 
thousand  dollars  at  the  discretion  of  the  court. 

Penalties  on  officers  of  corporations. 

Section  1087m — 11.  5.  Any  officer  of  a corporation,  joint 

stock  company  or  association  required  by  law  to  make,  render, 
sign  or  verify  any  return  who  makes  any  false  or  fraudulent  re- 
turn or  statement,  with  intent  to  defeat  or  evade  the  assessment 
required  by  this  act  to  be  made,  shall  upon  conviction  be  fined 
not  to  exceed  five  hundred  dollars  or  be  imprisoned  not  to  exceed 
one  year,  or  both,  at  the  discretion  of  the  court,  with  the  cost  of 
prosecution. 

Additions,  corrections  and  reassessments  of  incomes  of  in- 
dividuals. i h ( 

Section  1087m — 12.  1.  Whenever  the  assessor  of  incomes  or 

the  county  board  of  review  herein  provided  for  shall  have  rea- 
son to  believe  that  in  any  one  or  more  of  the  three  next  previous 
years  the  returns  made  by  any  person  other  than  a corporation, 
joint  stock  company,  or  association  are  incorrect  or  are  made 
with  false  or  fraudulent  intent,  or  when  any  such  person  has 
failed  or  refused  to  make  a return  as  required  by  law,  the  asses- 
sor or  county  board  of  review  shall  make  such  additions  or  cor- 
rections to  the  next  assessment  as  he  or  they  shall  deem  true  and 
just.  Whenever  the  assessor  or  the  county  board  of  review  shall 
so  increase  or  make  subject  to  tax  any  income  he  or  they  shall 
give  notice  in  writing  to  the  person  liable  for  the  payment  of  the 
tax  on  said  income  of  the  amount  of  the  assessment.  Such  no- 
tice may  be  served  by  registered  mail. 

This  section  provides  the  same  method  for  reassessing  income 
taxes  which  have  been  omitted  within  three  years  by  individuals 
as  is  set  forth  in  the  case  of  corporations  in  section  1087m — 11, 
sub.  1,  except  that  in  the  former  case  the  reassessment  is  made  by 
the  tax  commission  while  for  individuals  it  is  made  by  the  asses- 
sor of  incomes  or  the  board  of  review. 

Penalty  for  false  return  by  individual. 

Section  1087m— 12.  2.  In  case  any  return  made  by  any  per- 

son other  than  a corporation,  joint  stock  company  or  association 
is  made  with  false  or  fraudulent  intent,  or  in  case  of  a refusal 
or  neglect  to  make  a return  as  required  by  law,  and  an  addi- 
tional amount  is  discovered,  the  amount  so  discovered  shall  be 
subject  to  twice  the  original  rate. 

Every  individual  who  is  subject  to  an  income  tax  should  un- 
derstand that  in  case  of  his  refusal  or  neglect  to  make  a return 
he  may  be  required  to  pay  the  tax  at  double  the  original  rates. 


The  "Wisconsin  Income  Tax  Law. 


33 

If  necessary  the  income  will  be  “estimated”  and  the  tax  com- 
puted at  twice  the  regular  rate. 

Penalty  on  individual  for  making  false  return,  etc. 

Section  1087m — 12.  3.  Any  person,  other  than  a corpora- 

tion, joint  stock  company  or  association  who  fails  or  refuses  to 
make  a return  at  the  time  hereinbefore  specified  in  each  year  or 
shall  render  a false  or  fraudulent  return  shall  upon  conviction 
be  fined  not  to  exceed  five  hundred  dollars,  or  be  imprisoned  not 
to  exceed  one  year,  or  both,  at  the  discretion  of  the  court,  to- 
gether with  the  cost  of  prosecution. 


) 


34 


The  Wisconsin  Income  Tax  Law. 


VIII 


APPEAL  AND  REVIEW. 

Appeal  by  corporation. 

Section  1087m — 13.  Any  corporation,  joint  stock  company 
or  association  subject  to  assessment  by  the  state  tax  commission, 
feeling  aggrieved  by  the  decision  of  said  commission  regarding 
the  assessment  of  its  income,  shall  be  granted  the  same  rights  of 
hearing  and  appeal  as  are  now  granted  corporations  assessed  by 
said  commission. 

The  “ hearing  and  appeal”  referred  to  in  this  section  is  in  the 
nature  of  a review  or  rehearing  before  the  tax  commission  as  to 
the  amount  of  income  on  which  the  corporation  should  be  taxed. 
The  section  does  not  refer  to  proceedings  in  court  nor  does  it 
authorize  an  action  against  the  state  to  recover  taxes  unlawfully 
levied,  as  in  the  case  of  steam  railroads.  Relief  from  the  levy  or 
collection  of  an  unlawful  income  tax  must  be  sought  under  sub- 
division 4 of  section  1087m — 22  and  sections  1164  and  1210g  of 
the  statutes.  See  Montreal  Mining  Co.  vs.  State,  144  N.  W.  195. 

Board  of  review— appointment  and  compensation. 

Section  1087m — 14.  The  state  tax  commission  shall  appoint 
three  resident  taxpayers'  of  each  county  to  serve  as  a county 
board  of  review,  and  shall  fix  their  compensation,  which  shall 
not  be  more  than  ten  dollars  per  day,  and  shall  be  audited  and 
paid  in  the  same  manner  as  the  salary  of  assessors  under  this 
act  is  paid. 

Duties  of  county  clerk  as  clerk  of  board  of  review. 

Section  10$7m — 15.  The  county  clerk  shall  be  clerk  of  such 
board,  and  shall  keep  an  accurate  record  of  all  proceedings 
thereof,  including  a correct  record  of  all  changes  in  the  assess- 
ment rolls  made  by  the  board.  The  county  clerk  shall  take  full 
minutes  of  all  evidence  given  before  the  board ; provided,  how- 
ever, that  the  board,  with  the  approval  of  the  assessor  of  in- 
comes, may  in  cases  where  they  deem  it  advisable,  employ  a 
stenographic  reporter  to  take  such  evidence  in  shorthand,  and 
extend  the  same  in  typewritten  form.  The  county  clerk  shall 
preserve  in  his  office  a record  of  all  such  proceedings,  minutes 
and  evidence  taken,  and  all  documentary  evidence  offered.  The 
stenographer  shall  be  paid  by  the  state,  but  the  board  may,  in  its 
discretion,  charge  the  expenses  to  the  complaining  party  or  par- 
ties appearing  before  the  board. 


Tub  Wisconsin  Income  Tax  Law.  35 

Board  of  Review  shall  meet  last  Monday  of  July. 

Section  1087m — 16.  1.  The  county  board  of  review  of  each 

county,  constituting,  an  assessment  district,  shall  meet  annually 
on  the  last  Monday  of  July  at  ten  o’clock  a.  in.  at  the  court  house 
in  said  county  to  hear  complaints  and  to  review  the  assessments 
of  income  made  by  the  assessor.  A majority  shall  constitute  a 
quorum. 

Date  of  meeting  in  districts  comprising  more  than  one 
county. 

2.  In  assessment  districts  composed  of  more  than  one  county 
the  board  of  review  of  the  county  designated  by  the  assessor  of 
incomes  shall  meet  as  provided  above  and  the  board  of  review 
of  each  remaining  county  of  the  district  shall  meet  as  soon  there- 
after as  is  possible  for  the  assessor  of  incomes  to  be  present. 
The  date  of  such  meeting  shall  be  fixed  by  the  assessor  of  in- 
comes. 

Notice  of  meeting  to  be  published. 

3.  Notice  of  the  annual  meeting  of  each  county  board  of  re- 
view shall  be  published  in  a newspaper  of  the  county  at  least  one 
week  previous  to  such  meeting. 

Adjournments." 

4.  The  board  may  adjourn  from  day  to  day,  and  from  time 
to  time,  until  its  business  is  completed,  but  no  adjournment 
other  than  from  day  to  day  shall  be  had  except  upon  written 
request  and  for  satisfactory  cause  shown. 

Attendance  of  witnesses  and  production  of  books  and 
papers. 

5.  Attendance  of  witnesses  and  the  production  of  books  and 
papers  before  said  board  may  be  compelled  by  subpoena,  issued 
by  the  clerk  thereof,  a justice  of  the  peace  or  a court  commis- 
sioner. 

Duties  of  board  of  review. 

Section  1087m — 17.  1.  The  board  shall  hear  and  examine, 

and  permit  the  assessor  to  examine,  any  aggrieved  or  other  per- 
son upon  oath  who  shall  appear  before  it  in  relation  to  any  as- 
sessment or  omission  of  income,  and  may  increase  or  lessen  the 
amount  of  any  income  assessed,  if  satisfied  from  the  evidence 
submitted  and  the  statements  of  the  assessor,  that  such  change 
should  be  made. 

The  board  of  review  is  particularly  charged  with  the  duty  of 
examining  and  deciding  upon  the  facts  of  disputed  cases.  With 
respect  to  the  law  it  is  desirable  that  such  boards  should  follow 


36  The  Wisconsin  Income  Tax  Law. 

closely  the  ruling  of  the  courts  and  the  tax  commission  in  order 
that  there  may  be  uniformity  of  treatment  throughout  the 
state. 

Board  must  give  notice  of  changes  in  assessment. 

2.  The  board  shall  not  increase  any  assessments,  nor  assess 
any  income  not  on  the  roll  without  notice  in  writing  to  the  per- 
son liable  for  payment  of  the  tax  thereon,  or  his  agent,  if  either 
be  resident  of  the  county,  of  such  intention  in  time  to  appear 
and  be  heard  before  the  board  in  relation  thereto. 

Objections  to  assessment  must  be  made  before  board  of 
review. 

Section  1087m — 18.  No  person  subject  to  assessment  by  the 
county  assessor  shall  be  allowed  in  any  action  or  proceeding  to 
question  any  assessment  of  income,  unless  objections  thereto 
shall  first  have  been  presented  to  the  county  board  of  review  in 
good  faith  and  full  disclosure  made  under  oath  of  any  and  all 
income  of  such  party  liable  to  assessment. 

Appeal  may  be  taken  to  state  tax  commission. 

Section  1087m — 19.  1.  Any  person  dissatisfied  with  any  de- 

termination of  the  county  board  of  review  may  appeal  within 
twenty  days  to  the  state  tax  commission,  to  whom  a copy  of  the 
record  of  the  board  shall  be  certified,  together  with  all  evidence 
or  a copy  thereof,  relating  to  such  assessment. 

Tax  commission  may  review  assessments  on  appeal. 

2.  The  tax  commission  shall  review  such  assessments  from  the 
record  thus  submitted  and  shall  make  necessary  corrections  and 
certify  its  conclusion  to  the  county  clerk,  who  shall  duly  notify 
the  person  liable  for  the  tax  and  enter  upon  the  assessment  roll 
any  change  made  by  the  commission. 


The  Wisconsin  Income  Tax  Law. 


37 


IX 

APPORTIONMENT  AND  COLLECTION. 

Tax  commission  to  compute  and  certify  tax  on  corpora- 
tions. 

Section  1087m — 20.  1.  The  state  tax  commission  shall  com- 

plete the  assessment  of  income  for  each  corporation,  joint  stock 
company,  and  association  on  or  before  the  fifteenth  day  of  Octo- 
ber in  each  year  and  compute  the  tax  thereon,  and  shall  there- 
upon forthwith  certify  to  each  county  clerk  a statement  of  the 
assessment  of  each  corporation,  joint  stock  company  and  asso- 
ciation in  his  county  and  the  amount  of  tax  levied  against  each. 

Tax  commission  to  make  report. 

2.  The  state  tax  commission  shall  submit  in  their  biennial  re- 
port the  amount  of  income  tax  collected  for  each  county  in  the 
state,  and  shall  designate  the  several  general  classes  of  property 
from  which  the  incomes  were  received,  the  cost  to  the  state  and 
each  county  for  the  administration  of  the  law,  and  all  such  facts 
as  shall  be  required  to  give  a definite  understanding  of  the  finan- 
cial operations  of  the  law. 

Income  tax  of  individuals  to  be  computed  by  assessor  of 
incomes  and  county  clerk. 

Section  1087m- — 21.  The  tax  upon  the  income  of  persons 
other  than  corporations,  joint  stock  companies  and  associations 
shall  be  computed  by  the  county  clerk,  assisted  by  the  assessor 
of  incomes  and  said  clerk  shall  on  or  before  November  first,  cer- 
tify to  each  town,  city  and  village  clerk  the  names  of  all  persons 
whose  incomes  are  assessed  in  his  own  town,  city  or  village,  and 
the  amount  of  tax  levied  against  each  such  person,  and  such 
amount  shall  be  entered  by  the  town,  city  and  village  clerks  in  a 
separate  column  designated  “income  tax”  upon  the  tax  roll  of 
the  year,  and  shall  be  collected  and  paid  as  personal  property 
taxes  are  now  collected  and  paid. 

Where  tax  shall  be  assessed,  levied  and  collected. 

Section  1087m — 22.  The  place  at  which  the  income  tax  here- 
in provided  for  shall  be  assessed,  levied  and  collected  shall  be 
determined  as  follows: 

1.  In  their  return  for  purposes  of  assessment  persons  deriv- 
ing incomes  from  within  and  without  the  state,  Or  from  more 
than  one  political  subdivision  of  the  state,  shall  make  a separate 
accounting  of  the  income  derived  from  without  the  state  and 


38 


The  Wisconsin  Income  Tax  Law. 


from  each  political  subdivision  of  the  state  in  such  form  and 
manner  as  the  tax  commission  may  prescribe. 

In  dividing  income  between  Wisconsin  and  other  states  the 
process  described  under  section  1087m — 2.  3.  (pages  10,  11, 12) 

should  be  followed.  The  distribution  along  political  subdivi- 
sions of  this  state  may  be  made  in  proportion  to  gross  income, 
Investment,  or  preferably  by  an  exact  allocation  of  net  income  if 
possible. 

Assessment  of  income  derived  from  different  localities. 

Section  1087m — 22.  2.  The  entire  taxable  income  of  every 

person  deriving  income  from  within  and  without  the  state  or 
from  within  different  political  subdivisions  of  the  state,  when 
such  person  resides  within  the  state,  shall  be  combined  and  ag- 
gregated for  the  purpose  of  determining  the  proper  exemptions 
and  proper  rate  of  taxation.  The  taxable  income  so  computed 
shall  be  assessed,  and  taxes  at  such  rate  shall  be  paid,  in  the  sev- 
eral towns,  cities  and  villages  in  proportion  to  the  respective 
amounts  of  income  derived  from  each,  counting  that  part  of  the 
income  derived  from  without  the  state  when  taxable  as  having 
been  derived  from  the  town,  city  or  village  in  which  said  person 
resides. 

Income  of  nonresidents;  where  assessed. 

Section  1087m — 22.  3.  Income  derived  by  nonresidents  of 

the  state  from  sources  within  the  state  or  within  its  jurisdiction, 
shall  be  separately  assessed  and  taxed  in  the  . town,  city  or  vil- 
lage from  which  such  income  is  derived,  at  a rate  determined  by 
the  total  income  derived,  from  within  any  single  town,  city  or 
village. 

! y r; r; \ t *■; fi  rw w rw  :^:j;  w 

General  laws  as  to  personal  property  taxes  applicable. 

Section  1087m — 22.  4.  All  laws  not  in  conflict  with  the 

provisions  of  this  act,  relating  to  the  assessment,  collection  and 
payment  of  taxes  on  personal  property,  the  correction  of  errors 
in  assessment  and  tax  rolls,  the  compromise  or  cancellation  of 
illegal  taxes  and  the  refund  of  moneys  paid  thereon,  shall  be 
applicable  to  the  income  tax  herein  provided  for ; but  no  town 
or  village  board  or  common  council,  nor  the  county  officers  spe- 
cified in  section  1210g,  shall  compromise  or  cancel  any  income 
tax  or  any  part  thereof  or  refund  any  moneys  paid  thereon  with- 
out the  written  approval  of  the  assessor  of  incomes  who  made 
the  assessment  or  of  the  tax  commission  in  the  case  of  assess- 
ments made  by  it,  specifying  the  defect  in  the  assessment  or  tax 
proceeding  and  the  amount  of  taxable  income  which  should  have 
been  assessed  and  the  amount  of  the  taxes  justly  chargeable 
thereto.  (1913  c.  27.) 


The  Wisconsin  Income  Tax  Law. 


30 


The  foregoing  section  makes  the  statutory  provisions  relating  to 
the  manner  of  assessing  and  collecting  personal  property  taxes 
applicable  to  the  income  tax  where  no  express  provision  to  the 
contrary  is  made.  It  also  permits  the  correction  of  errors  in 
assessment  and  tax  rolls  by  town,  city  and  village  clerks  and 
treasurers  in  the  manner  and  to  the  extent  prescribed  by  sections 
1065,  1085  and  1085a  of  the  Statutes,  and  provides  for  the  re- 
covery of  income  taxes  unlawfully  levied  and  collected  with  the 
written  approval  of  the  person  or  board  which  made  the  assess- 
ment, in  the  manner  prescribed  by  section  1164  of  the  Statutes 
as  amended  by  chapter  478  of  the  Laws  of  1913. 

Delinquent  income  taxes. 

Section  1087m — 22.  6.  In  the  return  of  delinquent  income 

taxes  as  required  by  law  the  entire  amount  of  each  such  delin- 
quent income  tax  shall  be  returned  to  the  county  treasurer  with- 
out division  or  apportionment.  All  laws,  including  the  provi- 
sions of  any  city  charter  in  conflict  with  this  subsection,  are 
hereby  repealed.  (1913  c.  720.) 

This  provision  was  designed  to  secure  a uniform  practice  in 
the  collection  of  delinquent  income  taxes.  Certain  cities  oper- 
ating under  special  charter,  notably  Milwaukee,  have  followed 
the  practice  of  returning  delinquent  state  and  county  taxes  only 
and  retaining  the  city  tax  for  collection  through  the  police  de- 
partment. The  practice  has  led  to  confusion,  particularly  in 
the  application  of  the  offset  provision  of  the  income  tax  and 
may  interfere  with  the  collection  of  revenue.  This  section  is*  in 
conformity  with  section  1114  of  the  Statutes. 

Apportionment  of  income  tax. 

Section  1087m — 23.  The  revenue  derived  from  such  income 
tax  shall  be  divided  as  follows,  to  wit:  Ten  per  cent  to  the 

state,  twenty  per  cent  to  the  county  and  seventy  per  cent  to  the 
town,  city  or  village  in  which  the  tax  was  assessed,  levied  and 
collected,  which  shall  be  remitted  and  accounted  for  in  the  same 
manner  as  the  state  and  county  taxes  collected  from  property 
are  remitted  and  paid. 

Secrecy  required  as  to  contents  of  returns,  etc. 

Section  1087m — 24.  1.  No  commissioner,  assessor  of  in- 

comes, deputy,  member  of  a county  board  of  review,  or  any 
other  officer,  agent,  clerk  or  employe  shall  divulge  or  make 
known  to  any  person  in  any  manner  except  as  provided  by  law 
any  information  whatsoever  obtained  directly  or  indirectly  by 


46 


The  Wisconsin  Income  Tax  Law. 

him  in  the  discharge  of  his  duties  or  permit  any  income  return 
or  copy  thereof  or  any  paper  or  book  so  obtained  to  be  seen  or 
examined  by  any  person  except  as  provided  by  law. 

Penalties  on  officials  for  violating  secrecy  of  returns. 

2.  Any  officer,  agent,  clerk  or  employe  violating  any  of  the 
provisions  of  this  section  shall  upon  conviction  thereof  be  pun- 
ished by  fine  of  not  less  than  one  hundred  dollars  nor  more  than 
five  hundred  dollars,  or  by  imprisonment  in  the  county  jail  for 
not  less  than  one  month  nor  more  than  six  months,  or  by  impris- 
onment in  the  slate  prison  for  not  more  than  two  years,  at  the 
discretion  of  the  court. 

3.  Such  officer,  agent,  clerk  or  employe  upon  such  conviction 
shall  also  forfeit  his  office  or  employment  and  shall  be  incapable 
of  holding  any  public  office  in  this  state  for  a period  of  three 
years  thereafter. 

Tax  commission  authorized  to  make  certain  records  public. 

4.  Nothing  herein  shall  be  construed  as  preventing  the  assess- 
ment roll,  the  tax  roll  and  all  proceedings  had  before  the  county 
board  of  review  and  all  evidence  taken  at  such  hearing  from  be- 
ing open  to  public  inspection  at  such  times  and  under  such  con- 
ditions as  the  state  tax  commission  may  direct. 

City  and  village  officers  are  required  to  estimate  the  amount 
of  money  required  to  be  raised  by  taxation  in  their  respective 
districts  in  the  month  of  October  in  each  year.  In  doing  so, 
they  must  consider  the  revenues  available  from  all  sources,  in- 
cluding the  income  tax.  When  the  assessment  of  income  is  com- 
pleted, the  names  of  the  parties  subject  thereto  with  the  amount 
of  their  taxable  income  and  income  tax  are  required  to  be  ex- 
tended on  the  property  tax  roll  and  collected  by  the  local  treas- 
urer. Under  the  property  tax  the  assessment  and  tax  rolls  have 
always  been  treated  as  public  records  subject  to  examination  by 
any  person  having  occasion  to  consult  the  same.  In  the  light 
of  these  circumstances  and  the  letter  of  the  foregoing  statute,  it 
is  believed  that  the  legislature  intended  the  income  tax  assess- 
ment and  tax  rolls  to  be  public  records  and  the  commission  has 
ruled  accordingly.  There  is  no  such  necessity  for  the  publicity 
of  refurns  and  proceedings  before  the  board  of  review  and  the 
tax  commission  has  accordingly  forbidden  assessors  of  income 
and  county  clerks  from  publishing,  disclosing  or  permitting  the 
examination  of  any  return,  exhibit,  writing  or  proceeding  in 
their  custody  relating  to  the  assessment  of  incomes.  The  tax 
commission  has  therefore  promulgated  the  following  rule: 


The  Wisconsin  Income  Tax  Law. 


41 


To  County  Clerks: 

Whereas,  the  proper  officers  of  the  several  villages  ami  cities 
of  the  state  are  required  by  law  during  the  month  of  October  of 
each  year  to  estimate  the  amount  of  money  necessary  to  defray 
the  expenses  of  their  respective  municipalities  for  the  ensuing 
year,  and  to  levy  a tax  on  the  general  property  of  such  district 
for  that  purpose  and  in  so  doing  are  required  to  take  into  con- 
sideration the  revenues  available  from  all  sources,  including  the 
amount  to  be  derived  under  the  income  tax  law',  and, 

Whereas,  the  income  tax  law,  provides  that  the  assessment  and 
tax  rolls  and  all  proceedings  and  evidence  taken  before  the 
county  board  of  review  shall  be  open  to  public  inspection,  under 
such  conditions  as  the  tax  commission  may  direct ; 

Now,  Therefore,  It  is  hereby  ordered  and  directed  that  all  as- 
sessment rolls,  completed  by  the  assessor  and  board  of  review 
and  .filed  in  your  office,  and  all  tax  rolls  as  soon  as  convenient, 
be  treated  as  public  records,  open  to  the  inspection  of  persons 
having  occasion  to  consult  the  same,  to  the  same  extent  and  in 
the  same  manner  and  under  the  same  restrictions,  as  other  pub- 
lic records  in  your  custody.  You  are  further  directed  not  to 
make  public  or  permit  the  examination  of  any  return,  exhibit, 
writing  or  proceeding  in  your  possession  or  custody,  relating  to 
the  assessment  of  income  taxes,  except  the  assessment  and  tax 
roll,  hereinbefore  referred  to. 

This  rule  to  be  considered  permanent  until  revoked  or 
amended  by  the  tax  commission. 

Dated  at  the  Capitol  at  Madison,  AVisconsin,  this  1st  day  of 
October,  1913. 

By  order  of  Wisconsin  Tax  Commission. 

A.  J.  Myrland,  Secy. 

Office  of  county  supervisor  of  assessment  abolished. 

Section  1087m — 25.  1.  On  and  after  the  first  Monday  in  Jan- 

ary, 1912,  the  office  of  county  supervisor  of  assessment  is  hereby 
abolished. 

Assessor  of  incomes  to  perform  duties  of  supervisors  of 
assessment. 

2.  The  assessor  of  incomes  shall  on  and  after  the  first  Mon- 
day of  January,  1912,  in  addition  to  the  duties  and  powers  here- 
in imposed  and  conferred  upon  him,  perform  all  the  duties  and 
possess  all  the  powers  heretofore  imposed  and  conferred  by  law 
upon  the  said  county  supervisor  of  assessment.  The  assessor 


42  The  Wisconsin  Income  Tax  Law. 

of  incomes  shall  be  under  the  direction  and  control  of  the  state 
tax  commission,  and  shall  make  such  reports  to  the  commission, 
to  the  county  board  of  review  and  the  county  board  of  super- 
visors, and  perform  such  other  duties  as  the  commission  shall 
direct. 

The  powers  and  duties  of  assessors  of  income  outside  of  those 
relating  to  the  income  tax  law  are  fully  set  forth  in  section  1087b 
of  the  Statutes,  which  are  printed  as  Part  III  of  this  pamphlet. 

Personal  property  tax  receipts  may  be  offset  against  income 
tax — when. 

Section  1087m — 26.  Any  person  who  shall  have  paid  a tax 
assessed  upon  his  personal  property  during  any  year  shall  be 
permitted  to  present  the  receipt  therefor  to  the  tax  collector, 
together  with  any  similar  receipts  for  personal  property  taxes 
paid  by  members  of  his  family  whose  incomes  have  been  assessed 
to  him,  and  have  the  same  accepted  by  the  tax  collector  to  their 
full  amount  in  the  payment  of  income  taxes  assessed  against  such 
person  during  said  year ; provided,  that  no  receipt  for  taxes  paid 
on  the  shares  of  stock  in  any  state,  national  or  mutual  savings 
bank  or  trust  company  shall  be  allowed  as  an  offset  against  any 
income  tax  within  the  meaning  of  this  section.  ( 1913  c.  615.) 

Income  taxes  are  placed  on  the  same  tax  roll  as  real  and  per- 
sonal property  taxes,  and  are  payable  at  the  same  place  and  time 
as  these,  namely,  at  the  office  of  the  local  treasurers^  and  any 
time  after  the  third  Monday  in  December.  All  taxes  not  paid 
on  or  before  January  31st  are  subject  to  two  per  cent  penalty. 

The  right  of  personal  property  “ offset”  is  confined  to  the  per- 
son or  concern  that  owns  the  personal  property  assessed  and  is 
chargeable  with  both  the  personal  property  tax  and  the  income 
tax,  except  that  an  individual  may  use  the  receipt  for  personal 
property  taxes  paid  by  members  of  his  family  as  an  “offset” 
against  his  income  tax  when  his  return  includes  income  received 
by  such  members  of  his  family. 

The  right  of  personal  property  “offset”  is  also  limited  to  per- 
sonal property  taxes  appearing  upon  the  same  year’s  tax  roll  as 
the  income  tax. 

Furthermore  the  “offset”  is  limited  to  personal  property 
taxes  paid  in  the  state  of  Wisconsin  on  other  property  than  the 
stock  of  any  state,  national  or  mutual  savings  bank  or  trust  com- 
pany. 

Persons  and  corporations  having  personal  tax  offsets  in  more 
than  one  taxing  district  will  be  governed  by  the  following  rules. 


The  Wisconsin  Income  Tax  Imw. 


43 


OFFSET  OF  INCOME  TAX  BY  PERSONAL 
PROPERTY  TAX. 

Directions  to  Wisconsin  Taxpayers. 

When  the  income  tax  and  the  personal  property  tax  are  both 
assessed  in  the  same  district  and  the  taxpayer  is  not  assessed  for 
income  tax  in  any  other  district,  the  taxpayer  will  simply  pay 
the  larger  tax  and  obtain  two  receipts,  one  for  personal  prop- 
erty and  one  for  income  tax. 

If  the  taxpayer  wishes  to  use  a personal  tax  receipt  issued  in 
one  district  to  offset  income  tax  assessed  in  another  district,  the 
following  procedure  should  be  observed  : 

1.  Secure  a separate  personal  property  tax  receipt  and  have 
the  treasurer  endorse  on  it  the  amount  used  to  offset  income  tax 
in  that  district. 

2.  Present  or  mail  this  personal  tax  receipt  to  the  Assessor  of 
Incomes  of  the  county  in  which  it  was  issued  and  apply  for  Spe- 
cial Offset  Receipts  covering  the  balance  of  personal  property 
tax.  In  Milwaukee  city  apply  first  to  Income  Tax  Teller,  City 
Treasurer’s  Office. 

3.  This  application  should  state  the  amount  desired  for  offset 
in  each  other  district  in  which  the  taxpayer  has  income  tax  to 
pay,  giving  the  correct  name  of  such  district  and  the  county  in 
which  situated. 

4.  Offset  receipts  for  balance  of  personal  property  tax  will 
be  issued  with  coupons,  which  coupons  will  be  accepted  only  for 
the  amount  entered  upon  them  and  in  the  district  for  which  they 
are  issued. 

5.  The  taxpayer  should  pay  his  personal  property  taxes  in 
time  to  secure  special  coupon  receipts  from  the  Assessor  of  In- 
comes and  forward  them  to  the  local  treasurer  against  whom 
they  are  issued.  Penalties  are  imposed  if  the  taxes  are  not  paid 
on  or  before  January  31. 

6.  Ordinary  personal  property  tax  receipts  will  not  be  re- 
ceived in  offset  in  districts  other  than  that  in  which  issued. 

7.  The  exact  name  is  important.  For  instance,  a firm  cannot 
use  its  personal  property  tax  receipt  to  offset  the  income  tax  of 
its  members. 


44 


The  Wisconsin  Income  Tax  Law. 


8.  It  is  a common  practice  to  write  a personal  property  tax  re- 
ceipt at  the  bottom  of  the  real  estate  receipt.  Taxpayers  should 
therefore  request  a separate  personal  tax  receipt  whenever  they 
wish  to  use  the  latter  to  secure  the  special  offset  receipts  men- 
tioned above. 

Assessment  and  collection  of  taxes  for  1911  not  affected  by’ 
income  tax  law. 

Section  1087m — 27.  Nothing  contained  in  this  act  shall  be 
construed  to  affect  the  assessment  or  collection  of  taxes  assessed 
in  the  year  1911  or  prior  thereto,  under  present  laws,  nor  to 
limit  the  power  of  assessors  and  boards  of  review  relative  to 
correcting  assessment  rolls,  placing  omitted  property  thereon, 
and  reassessing  property  whenever  such  correction,  insertion  of 
omitted  property,  or  reassessment  might  be  made  under  the  laws 
as  they  now  exist. 

Tax  commission  may  make  rules  and  regulations. 

Section  1087m — 28.  The  state  tax  commission  is  hereby  em- 
powered to  make  such  rules  and  regulations  as  it  shall  deem 
necessary  in  order  to  carry  out  the  foregoing  provisions. 

Tax  commission  may  employ  clerks  and  specialists. 

Section  1087m — 29.  The  state  tax  commission  is  hereby  au- 
thorized to  employ  such  clerks  and  specialists  as  are  necessary 
to  carry  into  effective  operation  this  act. 


The  Wisconsin  Income  Tax  Law. 


45 


PART  III. 

DUTIES  OF  ASSESSORS  OF  INCOMES  IN  CONNECTION 
WITH  GENERAL  PROPERTY  TAXATION. 

Section  3.  Sections  772d,  772e,  772f,  772g,  772h,  772i  and 
772j  of  the  statutes  are  renumbered,  revised  and  amended  to 
read:  Section  1087b.  (1)  The  assessor  of  incomes  shall  have 

full  and  complete  supervision  and  direction  of  the  work  of  the 
town,  city  and  village  assessors  of  the  county  or  counties  within 
his  assessment  district  and  shall  annually,  on  or  before  the  last 
Tuesday  of  April,  call  a meeting  for  each  such  county  of  all 
such  local  assessors  for  conference  and  instruction  relative  to 
their  duties  in  the  valuation  and  assessment  of  all  property  sub- 
ject to  taxation.  Each  such  local  assessor,  upon  notice  by  mail 
from  said  assessor  of  incomes  s'hall  attend  such  meeting  and  shall 
receive  therefor  the  sum  of  three  dollars,  and  also  six  cents  per 
mile  for  travel  from  his  residence  to  the  county  seat  and  return- 
ing. Such  compensation  shall  be  paid  out  of  the  treasury  of  the 
county  in  which  such  local  assessor  resides  upon  the  certificate 
of  the  assessor  of  incomes  showing  such  attendance  and  travel, 
in  like  manner  as  certificates  of  witnesses  and  jurors  are  paid. 

(2)  The  assessor  of  incomes  shall  have  access  to  all  public 
records,  books,  papers  and  offices  throughout  his  district  and 
shall  make  a full  and  complete  examination  of  them  and  investi- 
gate all  other  matters  and  subjects  relative  to  the  assessment  and 
taxation  of  property  in  the  several  towns,  villages  and  cities  con- 
tained therein;  and  for  that  purpose  he  shall  visit  each  such 
town,  village  and  city  as  often  as  may  be  necessary  during  each 
year. 

(3)  The  assessor  of  incomes  shall  examine  and  test  the  work  of 
assessors  during  the  progress  of  their  assessments  and  ascertain 
whether  any  of  them  is  assessing  property  at  other  than  full 
value  or  is  omitting  property  subject  to  taxation  from  the  roll. 
He  shall  have  the  rights  and  powers  of  a local  assessor  for  the 
examination  of  persons  and  property  and  for  the  discovery  of 
property  subject  to  taxation,  and  shall  have  the  power  to  per- 
sonally value  and  reassess  any  property  previously  assessed  by  the 
local  assessor.  If  he  shall  ascertain  that  any  property  has  been 
omitted  or  not  assessed  according  to  law,  he  shall  bring  the  same 
to  the  attention  of  the  local  assessor  of  the  proper  district  and  if 
such  local  assessor  shall  neglect  or  refuse  to  correct  the  assess- 


4$  The  Wisconsin  Income  Tax  Law. 

ment  he  shall  report  the  fact  in  writing  to  the  clerk  of  the  proper 
hoard  of  review  at  or  before  the  meeting  of  such  hoard  and  such 
clerk  shall  lay  the  same  before  said  board  of  review  for  its  ac- 
tion. 

(4)  Whenever  the  assessor  of  incomes  ascertains,  or  has  good 
reason  to  believe,  that  any  assessor  is  guilty  of  a violation  of  law, 
he  is  authorized  to  make  complaint  to  the  presiding  judge  of  the 
circuit  court  for  the  removal  of  such  assessor.  The  district  at- 
torney shall  attend  and  prosecute  such  proceedings  for  removal. 

(5)  The  assessor  of  incomes  shall  make  a report  to  the  county 
board  of  each  county  within  his  assessment  district  showing  in 
detail  the  work  of  local  assesors  in  their  several  districts,  the 
failure,  if  any,  of  such  assessors  or  property  owners  to  comply 
with  the  law,  the  relative  assessed  and  true  value  of  property  in 
each  local  assessment  district,  and  all  such  information  and  sta- 
tistics as  he  may  obtain  which  will  be  of  assistance  to  the  county 
board  in  determining  the  relative  value  of  all  taxable  property 
in  each  town,  city  and  village  in  the  county.  Such  report  shall 
be  filed  with  the  county  clerk  at  least  fifteen  days  before  the  an- 
nual meeting  of  the  county  board.  The  county  clerk  shall  cause 
to  be  printed  not  less  than  two  hundred  copies  of  such  report, 
one  of  which  shall  be  mailed  immediately  by  the  county  clerk 
to  each  member  of  the  county  board.  Not  less  than  six  copies 
of  such  printed  report,  together  with  all  statistics  accompanying 
the  same,  shall  be  filed  with  the  state  tax  commission. 

(6)  The  county  board,  upon  its  own  motion,  may  direct  the 
assessor  of  incomes  to  make  a reassessment  of  all  the  taxable 
property  in  any  local  assessment  district  for  any  year,  and  to 
report  the  same  in  the  form  of  an  assessment  roll  to  the  county 
board  at  its  next  annual  session.  In  making  such  reassessment, 
the  value  of  the  property  shall  be  fixed,  as  nearly  as  may  be,  as 
of  the  time  the  original  assessment  was  made,  and  he  shall  have 
the  powers  and  be  governed  by  the  rules  provided  by  law  for 
local  assessors  in  the  assessment  of  property  for  taxation.  In 
case  the  aggregate  valuation  of  taxable  property  as  determined 
by  such  reassessment,  shall  be  ten  per  cent  or  more  in  excess  of 
the  aggregate  valuation  thereof  as  fixed  by  the  original  assess- 
ment, the  expense  of  making  such  reassessment,  not  exceeding 
five  dollars  per  day  for  each  day  necessarily  and  actually  spent 
in  making  the  same,  shall  be  charged  to  such  local  assessment 
district  in  the  next  apportionment  thereto  of  county  taxes. 

(7)  The  state  tax  commission  shall  call  a meeting  of  the  as- 
sessors of  incomes  at  the  capitol  at  a specified  time  in  the  month 
of  January  in  each  year,  for  a conference  on  the  subjects  of  tax- 
ation and  the  administration  of  the  laws,  and  for  the  instruction 
of  such  officers  in  their  duties.  The  actual  and  necessary  ex- 
penses of  each  such  officer  in  such  attendance  shall  be  audited 
and  paid  out  of  the  state  treasury  in  the  same  manner  as  other 
expenses  of  said  assessors  are  audited  and  paid.  (1913  c.  443.) 


The  Wisconsin  Income  Tax  Law. 


47 


INSTRUCTIONS  TO  INDIVIDUALS. 


1.  The  return  must  be  made  to  the  assessor  of  incomes, 

whether  you  have  any  taxable  income  or  not,  on  or 
before  the  date  given  on  the  blank  form  accompany- 
ing these  instructions.  If  no  return  is  received  on 
or  before  the  date  designated,  an  assessment  will  be 
made  by  the  assessor  of  incomes  and  the  taxpayer 
renders  himself  liable  to  the  penalties  provided  in 
section  1087m — 12.3. 

2.  Every  question  should  be  answered.  If  there  is  no  amount 

or  information  to  be  given  opposite  a question,  write 
“none.” 

3.  Separate  forms  have  been  prepared  as  enumerated  below. 

If  you  need  a different  form  write  to  the  assessor  of 
incomes.  All  corporations  should  make  their  returns 
to  the  Wisconsin  Tax  Commission  directly  on  form 
No.  4.  The  forms  are  : 

Form  Number  1.  Individuals. 

Form  Number  2.  Guardians,  trustees,  executors,  ad- 
ministrators, agents,  receivers  (with  special  instruc- 
tions). 

Form  Number  3.  Firms  and  copartnerships. 

Form  Number  4.  Corporations. 

Form  Number  11.  Farmers,  dairymen,  etc. 

Form  Number  21.  Wage  earners,  salaried  men,  and  other 
individuals  whose  principal  income  is  derived  from 
personal  service. 

4.  Income  received  by  the  wife  and  each  child  under  eighteen 

years  of  age  residing  with  the  taxpayer  as  members 
of  his  family  must  be  separately  stated  on  the  return. 

5.  Articles  taken  from  the  stock  of  grocers  and  other  mer- 

chants for  family  consumption  must,  be  accounted  for 
as  income,  inasmuch  as  the  cost  thereof  is  deducted 
under  the  head  of  expenses  of  the  business. 


48 


The  Wisconsin  Income  Tax  Law. 


6.  Exemptions:  An- individual  is  entitled  to  an  exemption 

of  $‘800;  husband  and  wife  $1200;  for  each  child  un- 
der eighteen  years  of  age  $200;  for  each  additional 
person  “actually  supported  by  and  entirely  depend 
ent  upon  the  taxpayer  for  his  support”  $200.  This 
does  not  exempt  children  over  eighteen  years  of  age 
in  normal  health  although  supported  by  the  parents 
at  home,  at  school  or  elsewhere. 

7.  Profits  from  purchase  and  sale  of  real  estate,  stocks, 

bonds  and  capital  assets  should  be  returned  in  answer 
to  the  appropriate  question.  If  such  property  was 
acquired  before  the  income  tax  took  effe.ct,  January 
1,  1911,  “ only  such  proportion  shall  be  taxable  as  the 
time  between  January  1,  191T,  and  the  date  of  sale 
bears  to  the  entire  time  between  the  date  of  acqui- 
sition and  the  date  of  sale.”  If  any  deduction  is 
claimed  on  this  account,  accompany  the  return  with 
an  explanatory  statement  specifying  the  character  of 
the  property,  date  of  purchase,  amount  paid,  date  of 
sale  and  the  amount  received. 

“Profits”  here  represent  the  excess  of  the  selling  price 
over  the  total  cost  of  buying  and  holding  the  prop- 
erty, including  interest  actually  paid  (but  not  esti- 
mated or  constructive  interest),  and  other  necessary 
expenses  of  holding  and  carrying  the  property,  pro- 
vided such  expenses  have  not  already  been  deducted 
in  the  income  tax  returns  for  1911  and  1912,  or  are 
not  elsewhere  deducted  in  the  present  return. 

8.  Wages:  This  deduction  is  limited  by  law  to  “payments 

made  within  the  year  for  wr.ages  of  employees  and  a 
reasonable  allowance  for  services  of  copartners  or 
members  of  a firm  actually  rendered  in  producing 
such  income.”  No  deduction  is  allowed  for  wages 
paid  to  household  servants  or  to  the  wife  or  minor 
children  of  a taxpayer  or  to  the  taxpayer  himself. 
If  such  amounts  were  deductible  they  would  simply 
have  to  be  reported  again  as  taxable  income. 

9.  Firms  and  copartnerships  may  treat  as  deductible  expenses 

reasonable  salaries  paid  to  partners,  provided  the 
amount  paid  to  each  partner  is  separately  stated  in 
the  return. 


The  Wisconsin  Income  Tax  Law. 


40 


10.  Repairs.  Additions  or  improvements  which  increase  the 

selling  value  of  property  beyond  its  value  on  January 
1,  1913,  are  not  repairs  and  cannot  be  deducted.  De- 
terioration-which  took  place  before  January  1,  1913, 
was  properly  covered  by  depreciation  charged  off  in 
previous  years,  and  cannot  be  used  to  justify  exces- 
sive repairs  in  1913. 

11.  Depreciation:  The  law  limits  this  deduction  to  “a  rea- 

sonable allowance  for  depreciation  by  use,  wear  and 
tear  of  the  property  from  which  the  income  is  de- 
rived, and  in  the  case  of  mines  and  quarries  an  allow- 
ance for  depletion  of  ores  and  other  natural  deposits 
on  the  basis  of  their  actual  original  cost  in  cash  or 
the  equivalent  of  cash.”  Mere  fluctuation  in  the 
value  of  stocks,  bonds  and  other  property  cannot  be 
deducted  as  depreciation. 

12.  Losses,  depreciation  and  miscellaneous  expenses  cannot  be 

considered  unless  fully  explained  as  called  for  in  the 
return. 

13.  Taxes:  Income  taxes  paid  in  1913  may  be  deducted  if 

separately  stated  on  the  blank.  This  deduction  should 
cover  only  the  cash  paid,  not  including  the  personal 
tax  offset. 

14.  Insurance:  Insurance  premiums  actually  paid  during  the 

year  on  property  from  which  taxable  income  is  de- 
rived may  be  deducted,  but  amounts  paid  for  life, 
sickness  or  accident  insurance  are  not  deductible. 

15.  Personality  offset:  Personal  property  tax  receipts,  to- 

gether with  similar  receipts  for  personal  property 
taxes  paid  by  members  of  the  family  whose  incomes 
are  included  in  the  assessment,  count  as  cash  in  the 
payment  of  the  income  tax ; but  this  offset  is  taken 
care  of  at  the  time  of  payment  and  not  during  the 
assessment  season. 

16.  Farmers:  (a)  The  value  of  farm  products  consumed  by 

the  family  must  be  included  as  gross  income. 

(b)  Money  spent  for  new  fences,  new  buildings  and  other  per- 
manent improvements  which  increase  the  value  of  the 
farm  cannot  be  deducted  as  expenses. 


&0  ^3  Phe  Wisconsin  Income  Tax  Law. 

(c)  The  cost  of  fattening  cattle  may  not  be  specially  deducted 

in  computing  the  profit  when  such  cattle  are  sold. 
Such  costs  are  taken  care  of  properly  when  the  costs 
of  feed  and  seed,  hired  labor,  etc.,  are  deducted. 

(d)  Share  rent  may  not  be  deducted.  Full  allowance  is  made 

for  share  rent  when  the  costs  of  raising  the  produce 
(wages  and  other  cash  expenditures)  are  deducted. 

(e)  Estimated  losses — such  as  failure  to  realize  expected 

profits  through  drought,  low  prices,  etc. — cannot  be 
deducted.  Full  allowance  is  made  on  this  account 
when  the  costs  of  labor,  etc.,  are  deducted. 

17.  Doctors,  lawyers  and  professional  men  will  report  their  . 

fees  or  earnings  when  collected. 

18.  Merchants,  manufacturers  and  business  men  generally  will 

report  sales  on  account  or  for  credit  as  gross  income 
of  the  year  when  the  sales  are  made. 

19.  Bookkeeping:  The  purpose  of  the  law  is  to  ascertain  the 

taxable  net  income.  Any  method  of  bookkeeping 
which  fairly  attains  this  result  is  acceptable. 


INSTRUCTIONS  TO  CORPORATIONS. 

1.  Making  returns : 

(a)  Section  1087m — 10.3  requires  every  corporation  to 

make  a return  “whether  taxable  under  this  act  or 
not. 9 * 

(b)  The  fact  that  a corporation  did  no  business  or  received 

no  income  during  the  year  1913  does  not  relieve  it 
from  making  a return. 

(c)  Every  question  should  be  answered.  If  there  is  no 

amount  or  information  to  be  given  opposite  a ques- 
tion write  in  the  word  “none.” 

(d)  Two  returns  are  sent  to  each  corporation  so  that  copy 

'can  be  retained  for  reference.  Do  not  send  dupli- 
cates. 

2.  Assets,  indebtedness  and  liabilities:  This  information  is 

required  in  order  properly  to  check  the  deduction  for 
interest,  which  by  Chapter  720,  Laws  of  1913,  is  now 
limited  to  interest  paid  on  “bonded  or  other  indebted- 
ness to  an  amount  of  such  indebtedness  not  exceeding 


The  Wisconsin  Income  Tax  LaW, 


51 


) 


its  [the  corporation 'sj  capital  stock  outstanding  at 
the  close  of  the  year;  provided  that  the  amount  of 
such  capital  stock  shall  in  no  case  exceed  the  clear 
value  of  its  assets  over  and  above  all  indebtedness 
and  liabilities. ” The  method  of  taxing  interest  paid 
upon  bonds  (practically)  to  the  corporations  issuing 
such  bonds,  incorporated  in  the  original  income  tax 
act,  has  by  Chapter  720,  Laws  of  1913,  been  repealed. 

3.  Gross  income  from  operation  of  business:  Gross  sales  dur- 

ing the  year  1913,  whether  for  cash  or  on  account, 
should  be  reported  under  this  head — and  not  gross 
profits  as  in  the  federal  corporation  tax  returns. 

4.  Profits  derived  from  the  occasional  sale  of  real  estate  and 

other  capital  assets  not  customarily  held  for  sale  in 
the  regular  line  of  business  should  be  reported  under 
question  8.  The  so-called  “three  year  rule”  has  been 
replaced  by  the  provision  that  ‘ ‘ of  the  profits  derived 
from  the  sale  of  real  estate  or  other  capital  assets 
acquired  previous  to  January  1,  1911,  only  such  pro- 
portion shall  be  taxable  as  the  time  between  January, 
1911,  and  the  date  of  sale,  bears  to  the  entire  time 
between  the  date  of  acquisition  and  the  date  of  sale.” 
If  any  deduction  is  claimed  on  this  account,  accom- 
pany the  return  with  an  explanatory  statement  spec- 
ifying the  character  of  the  property  and  the  date  of 
purchase,  amount  paid,  date  of  sale,  and  the  amount 
received.  “Profits”  here  represents  the  excess  of  the 
selling  price  over  the  total  cost  of  buying  and  holding 
the  property,  including  interest  actually  paid  (but 
not  estimated  or  constructive  interest)  and  other  nec- 
essary expenses  of  holding  and  carrying  the  property, 
provided  such  expenses  have  not  already  been  de- 
ducted in  the  income  tax  returns  for  former  years, 
or  are  not  elsewhere  deducted  in  the  present  return. 
In  the  case  of  the  sale  of  a machine  or  other  similar 
property,  the  profit  or  loss  should  be  measured  as  the 
difference  between  the  depreciated  value  and  the  sale 
price,  inasmuch  as  part  of  the  value  has  been  already 
recovered  by  the  charge  for  depreciation. 


52 


The  Wisconsin  Income  Tax  Law. 


5.  Companies  dealing  regularly  in  real  estate  are  not  affected 

by  the  prorating  process  quoted  in  the  preceding  rule, 
but  should  report  profits  on  all  sales.  Companies 
selling  on  the  “instalment  plan”  may  report  on  the 
basis  of  actual  collections  treating  as  profit  a share  of 
the  cash  collected  based  on  the  paper  profit  repre- 
sented in  the  original  sale.  Thus  if  property  costing 
$200  is  sold  for  $300,  to  be  paid  in  three  annual  in- 
stallments of  $100  each,  the  company  would  report 
$33.33  profit  each  year.  Real  estate  companies  can- 
not deduct  interest  or  taxes  paid  on  unproductive 
property.  Such  disbursements  are  chargeable  as  in- 
vestment or  carrying  charges  to  the  real  estate  itself, 
and  should  be  deducted  as  part  of  the  cost  when  the 
property  is  sold,  to  the  extent  that  they  have  not 
.already  been  deducted  in  the  income  tax  returns  for 
previous  years  or  elsewhere  in  the  present  return. 

6.  Inventories  should  in  all  cases  be  given  in  answer  to  ques- 

tions 17  and  18.  Where  the  accounting  methods  of 
the  corporation  make  it  obviously  incorrect  to  add 
and  subtract  annual  inventories,  this  fact  should  be 
indicated  by  entering  the  inventories  in  red  ink  or 
enclosing  them  in  brackets. 

7.  Materials  and  wages : If  the  separation  of  labor  cost  from 

cost  of  materials  and  goods  as  called  for  in  questions 
24  and  25,  involves  considerable  clerical  labor,  the  two 
items  may  be  merged  and  brief  explanatory  state- 
ment given. 

8.  Losses  and  depreciation  cannot  be  considered  unless 

treated  as  such  on  the  books  of  the  corporation  and 
fully  explained  as  called  for  in  the  return. 

9.  Repairs:  Replacements  of  machines  or  renewals  of  entire 

units  of  plant  are  properly  cared  for  by  depreciation 
and  must  not  be  deducted  as  repairs. 

10.  Taxes:  State  and  Federal  Income  Taxes  paid  during  1913 
may  be  deducted  provided  they  are  separately  stated 
in  answer  to  question  30.  The  deduction  for  state 
income  tax  should  cover  only  the  cash  paid,  and 
should  not  include  the  personal  property  tax  offset. 
Special  assessments  are  not  deductible,  as  taxes  or 


The  Wisconsin  Income  Tax  Law.  53 

otherwise,  as  they  are  in  law  betterments  increasing 
the  value  of  the  property  by  at  least  their  amount. 

11.  Banks  and  trust  companies,  by  the  provisions  of  Chapter 

615,  Laws  of  1913,  are  exempt  from  the  income  tax. 
All  such  companies,  however,  must  report  on  Blank 
Form  No.  9 the  names  and  addresses  of  all  officers 
and  employees  to  whom  compensation  of  more  than 
$700  was  paid  in  1913. 

12.  Personal  property  tax  offset:  The  personal  property  tax 

counts  as  cash  in  the  payment  of  income  tax,  but  this 
offset  is  taken  care  of  at  the  time  of  payment  and  not 
during  the  assessment  season.  Corporations  having 
income  and  personal  property  taxes  to  pay  in  more 
than  one  municipality,  may  secure  special  instruc- 
tions upon  application  to  the  Tax  Commission. 

13.  Rate  of  taxation:  The  method  of  computing  the  rate  of 

taxation  has  by  Chapter  720,  Laws  of  1913,  been 
changed  and  now  conforms  to  the  following  schedule : 


TAX  RATES  UPON  THE  INCOME  OF  CORPORATIONS. 

On  the  first  $1,000  of  taxable  income  or  any  part  thereof 

2%. 

On  the  second  $1,000  of  taxable  income  or  any  part  thereof 

On  the  third  $1,000  of  taxable  income  or  any  part  thereof 
3%. 

On  the  fourth  $1,000  of  taxable  income  or  any  part  thereof 

3 y2%. 

On  the  fifth  $1,000  of  taxable  income  or  any  part  thereof 

On  the  sixth  $1,000  of  taxable  income  or  any  part  thereof 

5%. 

On  all  taxable  income  in  excess  of  $6,000  6%. 

14.  Foreign  corporations  wrill  report  exactly  as  domestic  cor- 
porations engaged  in  business  within  and  without  the 
state,  although  foreign  corporations  are  not  subject 
to  taxation  upon  income  derived  from  land  contracts, 
mortgages,  stocks,  bonds  and  securities.  Interest  apd 


54 


The  Wisconsin  Income  Tax  Law. 


discounts  received  in  connection  with  the  regular  bus- 
iness of  a foreign  corporation  are,  however,  subject  to 
taxation  upon  the  amount  properly  assignable  or  ap- 
portionable  to  the  state  of  Wisconsin. 

15.  Corporations  engaged  in  business  within  and  without  the 
state : 

(a)  To  be  “ engaged  in  business  without  the  state”  a do- 
mestic corporation  must  maintain  a definitely  organ- 
ized branch  establishment  outside  of  Wisconsin.  The 
mere  sale  of  goods  or  products  without  the  state;  re- 
gardless of  the  terms  of  the  shipping  contract,  does 
not  bring  the  seller  within  the  class  of  those  “en- 
gaged in  business  without  the  state.”  The  converse 
of  this  rule  applies  to  foreign  corporations. 

(b)  In  the  case  of  domestic  corporations  the  first  and 
simplest  test  is  whether  such  company  has  taken  out 
a license  to  do  business  in  any  other  state.  In  doubt- 
ful cases  corporations  should  explain  whether  they 
have  stores  of  goods  and  products  subject  to  local 
taxation  in  other  states  and  give  any  other  data  cal- 
culated to  establish  the  fact  of  a business  residence 
without  the  state  of  Wisconsin.  (See  Question  39  A.) 

(c)  Non-apportionable  income  consists  of  rentals,  royalties 
and  gains  or  profits  from  the  operation  of  any  farm, 
mine  or  quarry  which  follow  the  situs  of  the  property 
from  which  derived,  and  income  from  personal  serv- 
ice, land  contracts,  piortgages,  stocks,  bonds  and  se- 
curities which  follows  the  residence  of  the  recipient. 

(d)  Income  other  than  that  enumerated  in  the  preceding 
paragraph  is  apportionable.  The  share  of  apportion- 
able  income  assignable  to  Wisconsin  depends  upon  the 
relation  between  the  property  and  gross  business  in 
Wisconsin  and  the  total  property  and  gross  business. 
“Property”  in  this  use  is  confined  to  property  yield- 
ing apportionable  income.  Property  yielding  non-ap- 
portionable  income  should  not  for  obvious  reasons  be 
employed  to  divide  apportionable  income.  Question 
39 -F  as  printed  on  the  original  blank  contains  a typo- 


The  Wisconsin  Income  Tax  Law. 


graphical  error  and  is  open  to  misconstruction.  This 
question  should  read:  “39-F.  Full  or  book  value  on 
December  31,  1913  of  property  other  than  and  exclud 
mg  land  contracts,  mortgages,  stocks,  bond3  and  se- 
curities, farms,  mines,  quarries  and  property  yielding 
rentals.  ’ ’ 

(e)  “Gross  Business.”  Gross  business  in  the  case  of  man- 
ufacturing concerns  is  composed  of  two  elements : the 
business  of  production  or  manufacture  and  that  of 
sale.  The  first  element  is  measured  by  the  cost  or 
factory  value  of  products  manufactured  during  the 
year  ; the  second  element  by  the  sales  made  during  the 
year  minus  the  cost  of  such  sales.  The  data  for  this 
apportionment  are  called  for  in  question  39-F  to  I. 

(f)  Mercantile  corporations  and  construction  companies 
engaged  in  business  within  and  without  the  state  are 
not  subject  to  the  apportionment  process  but  will 
make  a separate  accounting  for  income  derived  from 
property  located  and  business  transacted  within  the 
state  of  Wisconsin,  accompanying  the  return  with  a 
brief  explanation  of  the  manner  in  which  overhead 
and  other  general  expenses  have  been  prorated  or 
apportioned. 


56 


The  Wisconsin  Income  Tax  Law. 


INSTRUCTIONS  TO  GUARDIANS. 

Trustees,  executors,  administrators,  agents  or  receivers. 

1.  The  return  is  to  be  made  to  the  assessor  of  incomes  of  the 

district  in  which  the  representative  has  his  official 
residence. 

2.  With  respect  to  place  of  assessment  and  taxation  income  is 

of  two  classes:  that  which  follows  the  situs  of  the 
property  or  place  of  business,  and  that  which  follows 
the  residence  of  the  taxpayer.  The  first  class  is  not 
affected  by  the  existence  of  a guardianship,  trust, 
etc.,  i.  e.,  income  derived  from  property  located  and 
business  transacted  within  the  state  is  taxable  whether 
the  residence  of  the  representative  or  that  of  the 
ward,  beneficiary,  etc.,  be  within  or  without  the  state. 
The  second  class,  income  which  for  the  jmrpose  of 
taxation  follows  the  residence  of  the  taxpayer,  in- 
cludes income  from  personal  service,  from  land  con- 
tracts, mortgages,  stocks,  bonds  and  securities.  Such 
income  will  be  assessed  and  taxed  at  the  official  resi- 
dence of  the  representative,  which  is  generally  held 
to  be  the  district  in  which  the  ward,  decedent,  etc., 
lived  when  the  representative  was  appointed. 

3.  As  a general  rule  the  trustee  of  an  estate  under  the  juris- 

diction of  a Wisconsin  court  is  taxable  upon  the  in- 
come of  the  estate,  regardless  of  the  residence  of  the 
beneficiary  and  even  though  the  trustee  personally 
lives  without  the  state. 

4.  Return  should  be  made  not  only  of  the  income  received  by 

the  representative,  but  of  all  other  income  received  by 
the  ward,  beneficiary,  deceased  or  incompetent  person 
during  the  year  1913.  The  italicized  part  of  this  rule 
is  not  believed  to  apply  to  representatives  (par- 
ticularly agents  and  assignees)  of  residents  of  this 
state  who  are  competent  to  make  return  op  their  own 
behalf. 


The  Wisconsin  Income  Tax  Law. 


57 


5.  Income  received  during  1913  is  taxable  to  the  representa- 

tive whether  such  income  has  been  distributed  to  the 
beneficiaries  or  not. 

6.  If  an  executor  or  trustee  reports  and  is  assessed  for  the 

entire  income  of  an  estate,  the  beneficiaries  may  eacli 

deduct  the  amount  received  therefrom  in  making 
their  individual  returns.  Each  beneficiary,  however, 
should  report  the  amount  received  as  income  and 
claim  a corresponding  deduction  at  the  proper  place 
on  the  return. 

7.  Exemptions:  The  allowance  of  the  personal  exemption  is 

controlled  by  the  status  of  the  beneficiary.  No  ex- 
emption can  be  claimed  on  behalf  of  a ward,  benefici- 
ary, etc.,  if  the  latter  is  a nonresident  of  the  state  or 
if,  being  a resident,  he  is  entitled  to  an  exemption  in 
another  capacity. 

8.  Agents  reporting  income  in  the  form  of  rent  should  be 

careful  to  state  the  location  of  the  property  and  the 
other  facts  called  for  in  question  29,  Form  No.  1.  In 
answer  to  question  37  such  agents  should  also  state 
separately  (a)  the  amount  paid  as  commissions  on 
rents,  and  (b)  the  expenditure  for  janitor  service, 
heat,  water  and  light. 

9.  It  is  not  believed  that  a guardian  ad  litem  is  required  by 

section  1087m — 10.5  to  make  return  to  income  for  his 
ward. 

10.  The  principal  return  must  be  made*  on  Form  No.  1 ; the 
report  on  the  reverse  side  of  this  sheet  is  merely  sup- 
plementary. A separate  return  must  be  made  for 
each  estate,  trust,  etc.,  which  the  respondent  repre- 
sents. 


INDEX 


Page 

Accident,  surety,  etc.,  companies — 

exempt  from  income  tax 21 

Additions  and  corrections — 

assessor  and  board  of  review  may  make 35 

of  corporations  30 

of  individuals  30 

Administrators — 

see  Guardians,  trustees,  etc. 

Agent — 

may  not  divulge  contents  of  returns  39 

penalty  for  divulging  contents  of  returns 40 

required  to  make  return  29 

Amendments — 

see  Income  tax  law. 

Appeal — 

by  corporation,  for  hearing  34 

by  individual,  for  hearing  36 

Apportionment  and  collection  of  tax — , 

corporations  37 

Apportionment  of  income — 

residents  10 

nonresidents  10 

Apportionment  of  income  tax — 

after  collection 39 

between  different  localities 38 

Assessment  districts — 

list  of i 26 

Assessment  of  incomes — 

from  different  localities 38 

how  changes  made  35 

when  and  by  whom  made 28 


60 


Index. 


Assessment  roll — 

open  to  inspection 


41 


Assessors — 

violation  of  law 


46 


Assessors  of  incomes — 

annual  meeting  

annual  report  to  tax  commission  

duties  in  connection  with  general  property  taxation.  . . . 

how  appointed  

how  removed  or  transferred . 

may  appoint  deputies  and  assistants  

not  to  divulge  returns  

oath  to  be  taken  by f 

penalty  for  unanswered  questions  

powers  as  to  Correction  and  reassessment 

powers  of  

requirements  as  to  : 

rooms  furnished  by  county 

salaries  and  expenses  of 

shall  assess  incomes  of  individuals 

term  of  office . . . . 

to  act  as  supervisors  of  assessment . 

to  compute  tax  with  county  clerk 


46 

46 

45 

27 

27 

27 

39 

27 
30 
32 

28 

27 

28 

27 

28 
27 
41 
37 


Bank  stock — 

how  assessed  16 

tax  not  to  be  used  as  offset 16.  42 


Banks — 

dividends  exempted  16,  19 

exempted  from  income  tax  14 


Benevolent  associations — 

required  to  report  28 

when  taxable  20 

Board  of  review — 

adjournments  .......  : 35 

appeal  from,  taken  to  tax  commission  3 6 

appointment  and  compensation 34 

attendance  of  witnesses,  etc 3 5 

cannot  divulge  returns  39 

date  of  meeting  35 

duties  of .35 

may  appoint  stenographic  reporter 34 

may  make  additions  and  corrections 35 

must  give  notice  of  changes  in  assessment 3 6 

notice  of  meeting  published 35 

objections  to  assessment  must  be  made  before  board.  ...  35 

penalty  for  divulging  returns 39- 

when  and  where  shall  meet  35 

Bonded  or  other  indebtedness — 

amount  of  interest  deductible  13,14 


Index. 


01 


Bonds— 

interest  from  included  in  Income  X 

interest  from  where  assessed  Id 

irif&rest  from  United  States  

Business  year — 

may  end  when 7 


Capital  stock — 

see  Stock. 

~ l 

Child  under  18  years— 

Exemption  for 

income  added  tp  that  of  parent 

20 

Clergymen— 

pot  exempt  from  income  tax  , . . . . . 

Clerk  or  employe- 

may  not  divulge  contents  of  returns 

i • i • i «.  i 39 

Clerks  and  specialists— 

tax  commission  may  employ  

44 

Clerks  (of  towns,  cities  and  villages) — 

shall  enter  income  tax  on  rolls  

38 

Collection — 

of  income  tax 

37 

Constitutionality — 

Of  tax  of  public  officers’  salaries  

9 

Co-operative  associations — 

how  assessed 

21 

Copartnership — 

( see  also  Firm) 

deduction  of  reasonable  salaries  authorized  17 

defined  8 

when  may  close  annual  accounts  7 


Corporations — 

acting  in  fiduciary  capacity  29,  30 

appeal  by,  for  hearing 34 

appointment  and  collection  of  tax 37 

by  whom  assessed  28 

defined  8 

depreciation  allowed  13 

dividends  of  ; 15 


62 


Index. 


Corporations — Continued 

foreign,  deductions  for  17, 

interest  on  bonds,  of 

limitation  of  interest 13, 

losses  allowed  


may  be  reassessed  for  three  years  . . 

must  furnish  list  of  employes 

penalties  on,  for  false  returns,  etc.  . . 
penalties  on  officers  for  false  returns 


rates  of  tax  upon 23, 

report  of  stockholders 15, 

returns  by  


statement  of  employes  by  exempt  corporations 

taxes  of,  computed  by  tax  commission  

wages  and  salaries  paid "K 

Corrections  and  additions — 

to  returns  of  corporations  

to  returns  of  individuals 

County  board — 

may  order  reassessment 

shall  furnish  rooms  for  assessor  of  incomes 

County  clerk — 

duties  in  connection  with  board  of  review 

penalty  on  for  divulging  returns  

shall  compute  and  certify  income  tax  

County  supervisor  of  assessment — 

see  supervisors  of  assessment. 

Debt- 

interest  on  evidences  of  

Deductions — 

allowed  corporations 

bank  stock  J 

depreciation  

dividends  t 

interest  

losses  

operating  expenses 

repairs  when  allowed 

taxes  

wages  and  salaries 

allowed  to  individuals 

depreciation  

dividends  17,18, 

for  repairs  on  residence  of  property 

inheritances  

interest  on  indebtedness  

insurance,  cost  for  one  year 

life  insurance  

losses  


18 

14 

14 

15 

31 

13 

31 

32 

25 

16 

28 

29 

37 

13 

30 

32 

46 

28 

34 

39 

37 

8 

16 

13 

15 

13 

15 

13 

14 

15 

13 

17 

19 

9 

i p 

18 

18 

17 


Index. 


fii 


Deductions — Continued 

ordinary  and  necessary  expenses  17 

pensions  (U.  S. ) 18 

taxes  9,  18 

Delinquent  income  taxes — 

how  returned  .80 

collection  of 39 

Depreciation — 

allowed  on  mines  and  quarries 13,  14,  17 

how  determined  14 

Deputies  and  assistants — 

cannot  divulge  contents  of  returns 30 

how  appointed  27 

penalty  on,  for  divulging  returns 4 0 

salaries  and  expenses  of  27 


Directions — 

see  Offset  of  income  tax. 

Districts — 

see  Assessment  districts. 


Dividends — 

for  what  period  reckoned  8 

from  stock  included  in  income  8 

of  hanks  16 

of  corporations  15,  16 

where  taxed  0 

Educational  associations — 

may  be  required  to  make  reports 20 

taxable,  when  20 

Electric  light,  heat  and  power  companies — 

not  exempt  from  tax 21 

Employes — 

wages  and  salaries  to  be  reported i . . . 13 

Executors — 

required  to  make  returns 29 

Exemptions — 

of  public  funds 21 

religious  associations,  income  of  . 20 

state  banks,  income  of  20 

to  corporations  13, 20 

to  individuals  20 

to  legal  dependents,  etc 20 

to  members  of  firms 19 

to  public  service  corporations 21 


/■,  ■ . 

64  Index. 

Express  companies — 

exempt  from  income  tax 21 

Extension  of  time — 

may  be  allowed  for  filing  return 31 

Failure  to  make  return — 

by  corporations  28,  29 

by  individuals  29 

False  or  fraudulent  returns— 

by  corporation,  how  treated 3 \ 

by  individuals,  how  treated  §3 

Federal  income  tax  law — 

grants  access  to  returns § 

Fees^ 

included  in  income  , g 

Firms  and  copartnerships— 

annual  accounts  closed,  when  7 

defined  v 8 

included  in  term  “person*’  , § 

may  close  annual  accounts,  when  7 

not  entitled  to  exemptions  28 

salaries  and  wages  deducted  17 

Franchises — 

royalties  from  9 

Freight  line  and  equipment  companies — 

exempt  from  income  tax 21 

Gains — 

included  in  income  9 

• 

General  property — 

duties  of  assessors  of  incomes  45 

Gross  business — 

apportionment  process  ...  7 1 - 

how  measured  H 

includes  what  * 9 

o . - 

Guardians,  trustees,  etc. — 

required  to  make  returns 2 9 

acting  in  fiduciary  capacity 29,  30 

Husband  and  wife— 

- exemption  to  * t .»  i i i v . u 


Index. 


65 


Income — 

how  apportioned  . . . . : 10 

of  banks  42 

of  corporations  23 

of  nonresidents  10 

what  included  in •.  . 8 

where  assessed  10 

within  and  without  the  state 10 

Income  tax — 

apportionment  after  collection 30 

first  year,  1911  7 

of  nonresidents,  where  assessed 33 

when  deducted 18 

where  assessed,  levied  and  collected 37 

Income  tax  law — 

discussion  of  certain  1913  amendments 

7,  9,  10,  11,  13,  14,  16,17,  19,  20 

Indebtedness — 

interest  on  18 

Individuals — 

additions,  corrections  and  reassessments  of  income.  . 32* 

assessed  by  assessors  of  incomes 28 

deduction  of  interest  on  indebtedness 18 

deductions  for  wages  and  salaries 17 

dividends  deducted  17 

exemptions  allowed  20 

losses  allowed  . ..  . 17 

may  appeal  from  board  of  review 36 

penalties  on  31,  32 

pensions  (U.  S.)  deducted  18 

rates  of  tax  22,23 

term  used  for  natural  persons 8 

Inheritances — 

deductible  from  income,  when 18 

Instructions — 

to  corporation  50' 

to  individuals  ’ 47 

to  guardians  56 

Insurance — 

deduction  of,  when 9 

Interest — 

deductible  by  corporations  13,  14 

depreciation  allowed  13 

from  United  States  bonds  8 

included  in  income  8 

where  taxed  9> 


66 


Index. 


•/ 


Interest  on  indebtedness — 

deduction  allowed  to  individuals  18 

percentage  of  capital  stock  allowed  14 


Joint  stock  companies — 

see  Corporations. 

Judicial  officers — 

see  Public  officers. 


Land,  contracts — 

where  assessed . . . , 10 

Legally  dependent — 

term  defined ! 19 

Legally  liable — » 

see  Legally  dependent. 

Life  insurance — 

when  deducted  18 

Life  insurance  companies — 

exempt  from  income  tax  . 21 

Losses — 

bad  accounts  deducted,  when 15 

by  corporations,  deductible  when  15 

by  individuals,  deductible,  when  . . . .' 17 

Merchants’  stock — 

depreciation  accounted  for  in  inventories 14 

Mines — 

depreciation  allowed  . 13,  14,  17 

royalties  from  10,  11 

, ■ • 

Mortgages — 

included  in  income  . 8 

interest  from  10 

Mutual  savings  or  loan  and  building  associations — 

taxable,  when v 21 

Net  income — 

how  computed  9 

Net  rental — 

how  estimated  9 


Index. 


67 


Nonresidents — 

apportionable  income  . 11 

apportionment  of  income  10 

exemption  of  income ♦ 20 

for  what  assessed 10 

not  entitled  to  exemptions 20 

interest  from  mortgages 10 

where  assessed 38 

Notes — 

interest  on  v 8 

Objections — 

to  assessment,  made  before  board  of  review 35 

Officers  of  corporations — 

penalties  on  for  false  returns,  etc * 31 

Offset  of  income  tax — 

by  personal  property  tax 43 

Ordinary  and  necessary  expenses — 

may  be  deducted  from  income 17 


Pecuniary  profit — 

construed  20 

§Ppl|  , j 

Penalty — 

for  violating  secrecy  of  returns 40 

on  assessor  for  unanswered  questions 30 

on  corporation  for  failure  or  refusal  to  make  return.  . 31 

on  corporation  for  false  or  fraudulent  return . 31 

on  individuals  for  false  or  fraudulent  return  32 

on  officers  of  corporations  for  false  return 32 

Pensions,  U.  S. — 

deduction  allowed  individuals 18 

Person — 

defined  8 

Personal  property  offset — 

instructions  by  tax  commission  43 

on  bank  stock  not  allowed  16 

used  against  income  tax,  when  42,  43 

Profits— 

derived  from  sale  of  real  estate 9 

derived  from  sale  of  stock,  computed 9,  10 

for  what  period  reckoned  8 

included  in  income 8 

rule  as  to  3 year  period  changed 9 


68 


Index. 


Public  funds — 

income  of,  exempt  from  tax  21 

Public  officers — 

salaries  of,  taxed  6,9 

Public  records — 

tax  and  assessment  rolls  open  to  inspection 40 

Public  service  corporations — 

statement  of  employes  required  28 

taxable  when  21 

Quarries — 

depreciation  allowed  13 

Railroad  companies — 

exqmpt  from  tax 21 

Rates — 

applied  to  corporations 23,25 

applied  to  individuals  22,  23 

for  corporations,  doubled  when  31 

for  individuals,  doubled  when  32,  33 

Real  estate — 

rent  of,  included  in  income ! . . 8 

three  year  rule  repealed  and  replaced 9 

Real  estate  companies — 

excepted  from  general  provisions  of  1087m — 2 9,  10 

Reassessment — 

of  income  of  corporations  (for  3 years) 31 

of  individuals 32 

Receivers — 

required  to  make  return 29 

Religious  associations — 

income  not  taxable,  when 20 

Rentals — 

where  income  from,  assessed 10 

Rent  of  real  estate — 

included  in  income  , 8 

Repairs — 

when  deductible  14 


Residence — 

occupied  by  owner 


9 


Index. 


69 

Residence  property — 

included  in  income  . . : 8 

Returns — 

authority  to  use  other  than  calendar  year 7 

of  corporations 

additions  and  corrections 30 

extension  of  time  31 

instructions  50-55 

required  whether  blanks  received  or  not 29 

penalty  for  false  or  fraudulent  31 

to  whom  made 16,  28 

of  individuals 

additions  and  corrections 30 

instructions  47-50 

penalties  for  false  returns  32 

when  and  how  made - 28 

and  copartnerships,  to  whom  made 16 

secrecy  of  39 

Royalties — 

income  from 10,  11 

Rules  and  regulations — 

may  be  made  by  tax  commission 44 

Salaries — 

commission  may  disallow  when  not  reasonable  13 

deduction  of,  to  copartners  17 

included  in  income  8 

of  public  officers  9 

Scientific  associations — 

not  taxable,  when 20 

Secrecy — 

of  returns  : 39 

Sleeping  car  companies — 

exempt  from  ipcome  tax 21 

Special  assessments — 

not  considered  as  taxes  15 

Stepchildren — 

legal  obligations  to 19 

Stock — 

depreciation  not  allowed  as  such  14 

dividends  from 8 

income  of,  how  computed  8, 11 

where  assessed 10 


70 


Index. 


Stockholders — 

in  banks,  how  taxed 16,  42: 

Street  railways,  including  connected  electric  light,  heat 
and  power  companies — 

exempt  from  income  tax 21. 

. t 

Surety  companies — 

see  Accident,  surety,  etc.  companies. 


Supervisor  of  assessment — 


office  abolished 41 

Taxable  income — 

defined  23,  24 

from  different  localities  38 

how  computed  9 

what  included  in  10 


Tax  commission — 

authorized  to  make  certain  records  public 

call  meeting  of  assessors  of  incomes 

instructions  as  to  offset  of  income  tax 

may  appoint  assessors  . . . . * 

' may  authorize  appointment  of  deputies  and  assistants 

may  disallow  excessive  salaries  

may  double  rate  of  corporations  

may  double  rate  of  individuals 

may  employ  clerks  and  specialists 

may  extend  time  for  corporations 

may  fix  period  of  accounting 

may  fix  period  for  making  returns 

may  fix  salaries  of  assessors 

may  make  additions  and  corrections 

may  npt  divulge  returns 

, may  prescribe  method  of  accounting 

may  prescribe  penalty  for  failure  to  make  return 

may  prescribe  penalty  on  assessor  for  unanswered  ques- 
tions   7 .........  s . . 

may  reassess  corporations  

may  secure  rooms  for  assessor  of  incomes,  v^hen 

may  transfer  and  remove  assessors 

powers  of  

shall  assess  corporations 

shall  review  assessments  on  appeal 

to  make  report  of  amount  of  income  tax 


40 

46 

42 

27 

27 

13 


44 

31 

8 

28 

27 
30 
30 
10 

29 

30 

31 

28 
27' 
28 
28 

36 

37 


Taxes — 

assessment  and  collection  of,  not  affected  by  law  of 


1911  44 

deduction  allowed  corporations 15, 

deduction  allowed  individuals 18 

proper  deduction  when 15* 


Tax  roll,  see  Assessment  roll — 


Index. 


71 


Telegraph  companies — 

exempt  from  income  tax 21 

Telephone  companies — 

exempt  from  income  tax 21 

Three  year  rule — 

applied  to  profits  from  sale  of  real  estate,  changed.  ...  9 

Title  guaranty  companies — 

exempt  from  income  tax 21 

Trust  companies — 

dividends  deductible  to  stockholders  16,  19 

Trustees,  see  Guardians,  trustees,  etc. — 

United  States  pensions,  see  Pensions — 

Wages — 

deduction  allowed  to  individuals 17 

included  in  income 8 

Within  and  without  the  state — 

apportionment  of  income 10,  12 

how  income  is  determined 10 

individuals,  same  ratio  as  allowed  corporations 18 

taxable  income,  how  ratio  computed -38 

Wife- 

income  of,  added  to  that  of  husband 20 


t